There is no easy way to predict whether maritime trade will be better or worse in 2023 than it was in 2022.
The dry cargo market will mainly be affected by how China moves. The wet market may present a bit of a challenge. The LNG carrier market is probably the most predictable market based on current conditions. The container market, which has gradually returned to November 2020
The dry cargo market will mainly be affected by how China moves. Almost half of the world’s maritime trade in dry cargo is conducted by China. As the Covid containment framework is loosened in China and extreme lockdowns are lifted, the market for dry cargo will certainly benefit from the continued gradual opening of its markets. In addition, the Chinese government’s continuous measures to strengthen the real estate and construction market will result in an increase in the demand for raw materials (such as iron ore, coal, steel) and stimulate the demand for sea transportation as a consequence. It is also important to note that since 2021 many countries have announced infrastructure projects and their construction will positively affect the dry cargo market - the US, for example, has announced one of the most expensive infrastructure programs in history. Another key factor is how the Russian invasion of Ukraine will progress, as when it ends, Ukraine will begin to rebuild, something that will require a lot of raw materials to be transported.
The wet market may present a bit of a challenge. As the Ukrainian war continues, sanctions against Russian oil will likely not be lifted when the war ends, creating a crossword puzzle for those with strong problem-solving skills. Some countries have reduced their oil imports because of high prices, and Chinese demand for oil is still quite reduced - there were 1,800 international flights per week before COVID, but now they are only 1,000 – despite the easing of the covid policies. In contrast, the increased ton miles due to Russian oil’s replacement by other suppliers, the stockpiling of diesel from European countries, and the increased exports of refined products from third countries such as India have contributed to the increase in rates, particularly for product tankers.
The LNG carrier market is probably the most predictable market based on current conditions. As Europe attempts to become independent from Russian pipeline gas, the vessel demand is increasing, and the order book has grown quite large compared to the recent past. Currently, American, Canadian, Qatari and Nigerian imports can only meet the rising demand, so a key factor supporting 2023 rates is the growth of US, Qatari, and Nigerian exports to Europe.
Last but not least, we left the container market, which has gradually returned to November 2020 levels after a prolonged period of extremely high rates and profits. Because of high inflationary pressures plaguing almost every economy, port congestion has been eliminated, trade flows have returned to normal, and consumer goods demand has been reduced. Additionally, the supply of container ships has started to increase due to the large order book created during the pandemic. Its noteworthy that during December, Asian owners have driven about 15 container ships to be scrapped, making it the first time a large wave of Container demolition has occurred.