Euronav, the Belgian oil tanker company, forecasts a rise in global sea trade for this year, driven significantly by the rerouting of Red Sea shipping. However, the company flagged potential risks including a change in U.S. presidency and a slowdown in China’s economy.
According to Euronav’s press release on Thursday, seaborne trade is on track to grow by 5.1% this year, with the rerouting around the Red Sea contributing approximately 3.0% to the tonne-mile trade growth.
Currently, the shipping industry is experiencing some of its highest returns in decades, a trend that is expected to continue if current conditions persist. Many container ships are taking a longer route around the Horn of Africa due to attacks by Yemen’s Houthi militants in the Red Sea, which they claim is in solidarity with Palestinians in Gaza.
Euronav highlighted that the upcoming U.S. presidential elections in November could significantly impact global geopolitics, with ocean shipping being a crucial area of concern. The potential return of Donald Trump to office is expected to bring a more aggressive stance on China, potentially increasing trade tariffs and negatively affecting global trade and shipping.
Additionally, Euronav pointed to uncertainties surrounding global oil demand in the third quarter, partly due to China’s struggling economy. Low consumer spending and high unemployment in China could reduce its energy consumption, impacting global oil demand. Although the U.S. summer driving season might support oil prices through higher gasoline consumption, geopolitical issues involving Ukraine and Russia, as well as instability in the Red Sea, add unpredictability that might affect Suezmax and VLCC rates.
On a related note, Danish shipping company Maersk, often regarded as a barometer of global trade, indicated on Wednesday that it anticipates a slowdown in global container shipping growth after a robust first half of 2024, driven by customers stocking up to avoid disruptions.
