A new report by analysts at influential Danish Ship Finance will make for uneasy reading for shipowners and shipbuilders alike, suggesting that seaborne trades will decline through to 2050 and the age-old correlation with global GDP growth is increasingly redundant.
“Throughout history, seaborne trade volumes have increased in parallel with global economic growth. This long-standing trend might be approaching a pivotal change,” states the shipping markets report from Danish Ship Finance, which suggests that the climate agenda is dictating the revision of supply chain and production strategies.
“Megatrends such as demographics and decarbonisation are silently recalibrating the relationship between global economic growth and seaborne trade volumes,” the report, helmed by Christopher Rex (pictured), states.
Global GDP is increasingly shifting towards the service sector, which is inherently less reliant on seaborne trade than the primary and secondary sectors, Danish Ship Finance warned, adding that seaborne trade volumes will likely shrink towards 2050, primarily to encompass only cargo that is more feasible to transport than to produce locally.
Many of the larger seaborne cargo types will continue to increase alongside the global economy, but vessels transporting fossil fuels representing close to 40% of seaborne trade volumes, chemicals, iron ore in the context of the emerging green steel industry and long-haul container volumes are projected by Danish Ship Finance to reach peak demand sometime in the 2030s.
“Primary front-haul (spot) volumes may unexpectedly evaporate if production facilities are relocated,” the report warns.
Seaborne trade volumes expanded by an annual average of nearly 3% between 2000 and 2020. This translated into a global GDP multiplier of approximately one, meaning that seaborne trade volumes, on average, grew in tandem with global economic growth, but this subsequently fell to 0.66 between 2020 and 2023. The multiplier is predicted by Danish Ship Finance to average 0.75 in 2024.
While many other analysts are predicting bottlenecks at shipyards, with shipbuilding executives mulling expansion plans for the first time since the global financial crisis, the Danish Ship Finance report takes a contrarian view, based on how it sees seaborne trade volumes declining in the coming decades. Demand for shipyard capacity may decline by 25% towards 2040, the Danish report predicted.
