The limited increase in ship supply driven by the new International Maritime Organization (IMO) regulations is expected to contribute to the recovery of the shipping freight market in the medium and long term, according to S&P Global Market Intelligence.
The analysis shows that while freight rates are expected to return to the pre-pandemic level in 2023, limited active supply growth driven by regulations (demolitions and speed) will likely help the market to recover from 2024 onwards.
“Freight rates may return to the pre-pandemic level in 2023 with absence of congestion and weaker economic condition. However, limited active supply growth driven by regulations, which will lead to vessel demolitions and speed reduction, may help the market to recover in 2024 onwards,” commented Daejin Lee, lead shipping analyst at S&P Global Market Intelligence. The organisation notes that the container sector is expected to face pressure from the supply side due to heavy investment in newbuildings, while fresh new contracts are limited in other sectors, including the dry bulker and tanker.