BIMCO has revised its forecast, now expecting shipping in the Suez Canal to return to “normal” by 2026, with reroutings impacting global trade throughout 2025, World Cargo News reports.
The Baltic and International Maritime Council (BIMCO) has updated its forecast on the expected return of ships to the Suez Canal, now projecting that reroutings around the Cape of Good Hope due to security issues in the Red Sea will continue to affect global maritime trade throughout 2025. The change in assumptions follows the ongoing political upheaval in the region, which has significantly impacted vessel traffic. The revised outlook highlights the extended uncertainty for shipping companies and their supply chains, as rerouting vessels will continue to add costs and logistical complications.
“Our forecast therefore indicates a slight weakening of the supply/demand balance in 2025 followed by a significant weakening in 2026 as ship demand is expected to fall. On the other hand, if ships are able to return to the Suez Canal throughout 2025, we expect a significant weakening of market conditions followed by a slight improvement in 2026,” BIMCO said.
“If ships will still not be able to return to normal routings in 2026, the slight weakening of the supply/demand balance in 2025 is expected to be followed by a slight tightening of the balance in 2026.”
BIMCO added that following “very weak growth in 2023”, it estimates that cargo volumes will grow 5.5- 6.5% in 2024 and forecasts growth of 3-4% in 2025 and 3.5-4.5% in 2026. The council expects that import volumes into South & West Asia and South & Central America will grow the fastest.
Charter rates and newbuilding prices
Furthermore, BIMCO reports that time charter rates have remained surprisingly stable despite falling freight rates. On average, year-to-date time charter rates have been 52% higher than in 2023. Notably, average fixture periods have climbed from eight months at the start of the year to 24 months, indicating longer-term commitments. This shift in fixture periods is expected to reduce the availability of time charter tonnage in 2025, helping to support time charter rates throughout the year. Looking ahead to 2026, BIMCO forecasts that a weakening supply/demand balance will likely impact time charter rates, as the market adjusts to the new conditions.
In terms of vessel prices, BIMCO notes that while price increases for newbuildings appear to be losing momentum, prices for five-year-old ships have risen alongside time charter rates. As a result, prices for five-year-old ships are now approaching 80% of newbuilding prices, a significant recovery from below 70% at the start of 2024.
“We have previously predicted that newbuilding prices would peak, only to see them continue to climb. Shipowners’ desire to continue to order new container ships has surprised us, which along with increased contracting activity for tankers, has helped lift the order book and prices. We could of course be surprised again but must believe that this time, we are getting very close to the peak of prices, although continued container contracting and a sudden surge in contracting of bulkers could again prove us wrong,” BIMCO said. “We expect second-hand prices to continue to follow the developments in the time charter market and therefore remain mostly stable 2025 but fall in 2026.”