Shipping market outlook 2022 Container vs Dry bulk
The dry bulk and container market balance is expected to remain stable in 2022, while freight rates may face correction when vaccines reduce pandemic impacts. We believe the strength in global containerized trade has had a profound impact on the geared dry bulk freight rates and trade pattern.
The Impact of Container Rates on Geared Bulkers
General cargo (breakbulk) vessels that have shared similar terminal and cargo with geared bulkers (Supramax and Handysize) have shifted to the container-linked market because of extremely high freight rates for container ships this year. Consequently, container cargo has been spilling over to general cargo ship (breakbulk/MPV/HL) and then minor bulk cargo usually carried by container or general cargo vessels have been shifted to geared bulkers.
Moreover, with general cargo ships mostly picking up container-related cargoes, there has been much less competition from general cargo vessels for supra/handy minor bulk routes. These higher demand and lesser supply balance have boosted the geared bulkers’ backhaul rates even higher. Therefore, as long as container rates remain high enough to capture part of general bulkers and open hatch cargo vessels in the container sector commercially, geared bulker rates are expected to be supported, specifically backhaul routes.
Container Market Projections and Trade Volume
A major assumption for the dry bulker rates outlook needs to be based on the container market outlook. Based on record high backlog and limited fleet orderbook in 2022, many experts believe that container rates are likely to remain high until at least the first half of 2022 albeit lower than 2021. With continued strength in the container market in 2022, we expect many geared bulkers will stay in the container sector, which practically reduces fleet supply and enables them to outperform other size sectors.
IHS Markit predicts that the global containerized export volume will increase by 4.8% in 2021, mainly driven by strength in U.S. container imports (15.7%) and will continue to grow by about 2-3% in 2022 based on record high backlog and gradual recovery of global economy. The following table illustrates the expected growth trends in the container sector:
| Metric | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|
| Annual Container Fleet Growth | 3.0% | 4.3% | 4.5% | 7.5% |
| Global Containerized Export Volume Growth | - | 4.8% | 2-3% | - |
Supply-Side Pressures and Regional Factors
Container freight rates are expected to face correction in the coming years with supply-side pressure including reduced congestion and a large number of newbuilding deliveries. Consumers in the U.S. are supporting the container freight rates for goods shipped across the Pacific; container trade volume to U.S. are expected to increase by 2-3% in the next two years.
Bulk Shipping and China's Influence
Conversely, Bulk Shipping Rates Extend Slide on Weak Demand From China. A slowdown in China’s steel production is curbing demand for bulk ships to transport iron ore, driving a steady decline in global freight rates from October’s peak. The Baltic Dry Index lower as a result of sinking iron ore imports, as owners idling vessels as Lunar New Year damps demand.
