Fitch Ratings has highlighted growing risks for the shipping sector and lowered its forecast for global container demand growth to between 2 per cent and 4 per cent as mainland China export and manufacturing data disappoints.
In a report released on Monday, Fitch said slower economic growth on the mainland, a key player in global trade, posed significant risks for the shipping sector, which already faced overcapacity, weak freight rates and stretched financials. It predicted bankruptcies among smaller, unrated shippers and further industry consolidation.
The Chinese Academy of Social Sciences said last week it expects mainland third-quarter gross domestic product growth to be worse than in the second quarter and as low as 6.9 per cent. Mainland imports and exports continued to slump last month.
Fitch trimmed its outlook for global container demand growth to between 2 per cent and 4 per cent this year, down from a previous forecast of 4 per cent to 5 per cent growth.
“The supply-demand imbalance will be exacerbated by container shipping companies continuing to order mega-vessels,” it said. “Because of their size, these vessels are largely limited to the Europe-Asia trading lane, contributing to the overcapacity.”
Fitch also posted a negative outlook for the dry bulk segment, as the Baltic Dry Index average for the year is at its lowest in 10 years. It expects tanker shipping to be less affected due to better supply-demand fundamentals, helped by falling oil prices.