Veson Nautical's 2024 Year-End Report: The Container Industry Drives High Prices
According to Veson Nautical's "2024 Year-End Report," the shipping industry saw significant value increases across multiple sectors over the past 12 months, driven by the post-pandemic shipping boom and a strong newbuilding market.
The report notes that the newbuilding market has continued to grow, with a significant increase in orders, particularly in the Panamax and Cape-size sectors. China's dominant position in orders and shipyard production remains a decisive trend, further consolidating its position in the bulk carrier industry.
Container Industry Continues to Thrive
The report highlights that the prolonged Red Sea crisis, which increased sailing distances, became a key driver of demand in 2024. Supported by global trade growth of about 6%, global TEU-mileage increased by approximately 16% year-on-year. As a result, the time-charter (TC) rates for container vessels across all sectors saw an increase. By the end of the year, Panamax vessels were earning $73,330 per day, more than double last year's rate, reflecting a 111% year-on-year increase.
Senior Content Analyst Rebecca Galanopoulos said, "Driven by increased demand, higher earnings, and a strong recovery in asset values across all sectors, the container market experienced significant growth over the past year." This is also reflected in new ship orders, with the total number of orders, including options, rising to 321, a 76% increase from the 182 orders in 2023.
Strong Mineral Exports Drive the Dry Bulk Market
The report also notes that the value of dry bulk vessels has increased for most of the year compared to 2023, with growth seen across all age sectors and subtypes. The most notable increase occurred in the Cape-size segment, where the value of 15-year-old, 180,000 DWT vessels increased by around 26.1% year-on-year. Strong imports of iron ore, bauxite, and coal from China, along with vessels rerouting around the Cape of Good Hope to avoid the Red Sea conflict, fueled strong profits in the dry bulk market.
The increase in ton-mile demand, requiring longer distances, had a significant impact on earnings this year. However, despite remaining at very high levels compared to historical averages, dry bulk prices retreated in the final quarter of the year due to weakened market confidence.
Tanker Bull Market Gradually Weakens Towards Year-End
The report adds that the tanker market started the year with a strong performance, with both prices and values in a bullish position, driven by increased ton-mile demand from sanctions on Russian oil and vessels rerouting around the Cape of Good Hope to avoid the Red Sea conflict. However, by the end of the year, due to excessively high prices, weak Chinese demand, and the uncertainty surrounding the upcoming U.S. presidential election and potential impacts on oil trade, earnings decreased and second-hand sales slowed.
LNG Market Lags Behind Other Sectors
The report further mentions that the LNG transport sector experienced weak earnings in 2024, due to project delays, increased vessel supply, and high inventories. Large LNG one-year TC rates were around $70,000/day at the start of the year, but by early December, they had dropped to about $26,000/day, bringing the average price for 2024 to around $55,000/day, a 52% decrease from the 2023 average. There was no typical peak season for LNG vessels this year, as 62 vessels were delivered, and demand struggled to keep up.
Veson Nautical's maritime analyst Jarl Milford stated, "Despite weak earnings, the value of LNG vessels across various sizes and ages has been steadily increasing, based on fixed-age LNG vessels' asset values." He added, "In addition to second-hand transactions, overall newbuilding order activity for LNG vessels also saw a year-on-year increase, and the buying and selling activity (S&P) in the LNG sector has also risen."
Milford concluded that the bullish outlook in the container market for newbuildings is pushing asset prices up in other markets as well.
