The Jeuns

6% of Fleet Tonnage Now Capable of Alternative Fuel

April 2, 2024 | by The Jeuns

Clarkson Research’s latest forecast for the global shipping markets, Shipping Review & Outlook, indicates positive market conditions across various sectors in the industry. Key pinch points identified by industry analysts include geopolitical disruptions to trade patterns and increasing emissions regulations driving market dynamics.

According to a recent report from the brokerage, total shipbuilding output and newbuild prices both saw a 10% increase in 2023. This growth was accompanied by China’s shipbuilding industry reaching half of the total yard output and alternative-fuelled vessels nearing 50% of the total orderbook tonnage.

Trade volumes also saw a 3% growth to reach 12.4 billion tonnes in 2023, with China’s trade playing a significant role. Clarksons projects further growth of 2% to 12.6 billion tonnes in 2024.

Events in the Red Sea, where vessels are targeted by Yemen’s Houthi militants, have impacted shipping demand and led to diversions, benefitting larger vessel classes offering economies of scale. Red Sea traffic accounts for about 10% of global trade, with vessels rerouting via the Cape of Good Hope due to disruptions.

Clarksons estimates that diversions are generating an additional 3% in global vessel demand, with the container sector alone seeing an 11% increase. The firm also anticipates continued interest in newbuild orders, particularly from the tanker sector, and ongoing environmental fleet renewal programs from cargo and liner companies.

The introduction of a carbon price mechanism and environmental regulations, such as the EU ETS extension to the maritime sector, are expected to drive shipowners to invest in improving vessel and fleet environmental performance. The report also highlights trends in green technology uptake and fleet renewal in the coming years.

Shipbuilding slot availability is tight, with prices up 40% since 2020. Recycling has been limited, while the sale and purchase markets have been active, with older tonnage finding new employment at a premium. Spot freight rates have doubled since early December 2023, with charter rates up 37%, indicating a positive trend in the industry.


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