In Brief
- Sea trade volumes have continued to rise since 2000, and shipping routes are lengthening as vessels reroute around conflict zones and undertake more trans-continental voyages.
- Despite policy and geopolitical disruptions at key chokepoints, trade demand has shown limited weakening as shipping lanes typically adjust and goods get re-routed.
- Shipping demand is growing while supply stays tight, with a subdued orderbook, idle rates near 10-year lows, and an aging fleet supporting ongoing replacement needs.
Transportation played and will continue to play a vital role in the global economy.
Global trade has grown rapidly over the past decades, with transportation assets the backbone of the global supply chain.
The volume of global trade by sea, which still represents the main mode of transport for goods, has continually grown since the year 2000. We have also seen the average distance traveled by ships increase due to a number of factors, including ships taking longer routes to avoid conflict zones, and an increase in the size of vessels making trans-continental voyages.
Global trade is resilient to disruptions.
Volatile and rapid changes to global trade policies and geopolitics have continued to disrupt global supply chains. However, global trade has shown little signs of weakening, as transportation demand remains central to the global economy.
Major strategic chokepoints of trade, could be disrupted from time to time by international policy or military conflict, but a shift of shipping lanes typically follows. This led to a continual growth in global trade as goods are re-routed between different countries in response to disruptions.
Shipping demand is growing but supply remains tight.
The global orderbook as a percentage of fleet remains at subdued level compared to historical ranges, suggesting limited risk of oversupply which occurred over 2008-09.
Ships sitting idle at port (idle rates), although spiked during the pandemic, have since reduced to near 10-year lows as global economy recovered. An aging global fleet also suggests demand for new ships to continue to likely increase to pile up in the future.