Author Name: Tiffany Lee – Marketing Analyst at FreightAmigo｜16/9/2022
The Baltic and International Maritime Council (BIMCO) predicts that as shipowners proceed with the adoption of the IMO 2023 requirements, demand for container ships would rise by 10% as of 2023.
The new IMO 2023 regulation is a hot topic in the shipping industry that is likely to impact the demand and supply balance moving forward. To meet the new requirements of the Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII) rating scheme, Soren Skou, CEO of the world’s largest container shipping company APM-Maersk, estimated that the supply and capacity of vessels in the container shipping market would need by 5% to 15% in the long term. Someone said that ships will need to slow down by an average of 20% to fulfil the requirement, which is equal to a 20% capacity decrease. This is putting greater pressure on the supply side amid likely adjustments to sailing routes.
The EEXI requirements of the new IMO 2023 regulations will necessitate the early demolition of many old ships. BIMCO’s Chief Shipping Analyst, Niels Rasmussen, anticipates that demolition activity will resume during the rest of the year and in 2023. Every year, between 200,000 and 300,000 TEU of old ships are demolished. According to Rasmussen, this year, that number will increase even further if owners decide to demolish ships instead of paying for retrofits to comply with EEXI.
Rasmussen assumes that vessel demand in 2023 increases by 10% due to EEXI, congestion decreases by 7-8%, the fleet size increases by 8%, and cargo demand increases vessel demand by 3-4%. Then, they can conclude that fleet supply and demand balance will worsen in 2023 and result in lower time charter rates and second-hand prices. He also added that global economic headwinds are adding many risks to container demand.
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