January’s top research picks

Launched yesterday for subscribers of Splash Extra, our team of journalists has combed through the the hundreds of shipping analyst reports published this month to pick out the best predictions.

Fuel costs

All eyes in shipping this month have been tracking the fuel price spread between high and low sulphur content fuel oil in the first weeks since the imposition of the global sulphur cap. The price gap peaked on January 7 at $343 per tonne and has since dropped dramatically, heading towards $200.

“Even given the recent narrowing of the spread, shipping companies are still faced with a massive uptick in fuel oil costs, which is set to affect operating margins in the upcoming quarters, as many companies have little leeway to pass on the additional costs to their customers,” BIMCO noted in a note, adding: “Despite the lower spread, the investment payback period for a scrubber is between half a year to one and a half years, depending on the cost of the scrubber and daily consumption, which allows for substantial fuel oil cost savings for scrubber-fitted ships.

Containers

Three of the world’s most respected container shipping consultants – Alphaliner, Sea-Intelligence and Drewry – have made their 2020 fleet growth predictions, with the global liner fleet on course to pass the 24m teu mark this year.

Alphaliner is predicting the global containership fleet will grow from 23.23m teu at the beginning of 2020 to reach 24.05m teu by the end of the year, for a growth rate of 3.5%.

Sea-Intelligence has predicted supply will grow 3.7% in 2020, 4.4% in 2021, and 2% in 2022, but adjusted for likely slippage, it expects 3-3.5% in 2020-2022.

“2020 is expected to see capacity supply reach 1.3M TEU, the highest since 2015, but this is somewhat tempered by our expectation of higher-than-average scrapping of 500,000 TEU, primarily due to a larger number of smaller vessels becoming economically unviable, due to the IMO 2020 low-sulphur regulations,” Sea-Intelligence suggested.

Lastly, Drewry estimates that container carriers will add about 1.2m in teu capacity this year, increasing total capacity 5.3%, versus an expected increase in global trade in 2020 of just 2%.

Drewry’s global supply-demand index (adjusted for idle fleet) calls for a tiny decrease of 0.4 points to 90.6 in 2020, with any index reading below 100 indicating overcapacity.

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