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Posidonia 2024: The State of the Maritime Industry is Strong

Errant thoughts on Posidonia 2024


Early June on even years would find any self-respecting professional in the maritime / shipping industry attending the Posidonia International Shipping Exhibition in Athens, Greece; after all, on each occurrence, almost one hundred countries are represented via appr. 30,000 attendees and a couple of thousand exhibitors.  Given the dependably sunny Greek weather and the numerous parties that shipping companies are expected to host, Posidonia is the perfect venue to mix business and pleasure, catch up on shipping market developments, run into old friends and make some new ones.

Where 2,000 exhibitors gather for shipping at Posidonia (Karatzas Images)

Posidonia 2024 set all-time records in terms of attendance, which it was to be expected since Posidonia 2022 was not heavily attended by countries of Far East and the Pacific Rim (still Covid19 restrictions), while the presently strong freight market ensured that shipping companies had the discretionary budget for making their presence shown in spades.


For someone having attended Posidonia over business cycles, attendance to Posidonia offers a historical perspective as well. There was the high watermark of Posidonia 2008 when corporate parties were ranked on the account of summerly-clad Russian models in attendance, to Posidonia 2016 when most company parties were limited to a sober get-together at a (reasonably-priced) bar. The state of the market may be gauged from Posidonia attendance behavior, for sure.  And more, topics discussed and not discussed are critical too for gauging the market. As a result, a seasoned attendee cannot and should miss the “mood” and underlying message from a Posidonia event.


This year at Posidonia 2024, definitely it has been an environment of very upbeat momentum.  All shipping sectors are experiencing in unison strong freight rates (not always the case as shipping sectors do not move in sync); this time, dry-bulk owners, containership owners, car-carrier owners, and, most of all, tanker owners had a lot to celebrate. All sectors have been doing well or exceptionally well for the last two years or so, and people had to be in high spirits.


Given that the present strong market has been succeeding several years of “lean cows”, the present euphoria can be well understood. And, to think of it, the last decade, with the exception of a freight spike here and there for each of the shipping market sectors (and the super-spike for the containership market during Covid19), it could be synopsized as the decade of false expectations.  A full, structural recovery has been failing the shipping industry since 2010, and whenever there was any kind of recovery, it was flooded in short order by a continuously huge newbuilding orderbook wave.


As joyful as it is to see shipping doing well, one has to wonder whether the euphoria will be sustainable this time.  While the world economies are doing well overall and world trade keeps ships busy, let’s not forget that the presently strong market depends on factors that are not necessarily related to structural demand for ships. 


For starters, the Houthi attacks on ships transiting the Red Sea has forced many companies (especially containerships, car carriers and tankers) to circumnavigate the Cape of Good Hope, around Africa, adding around 30% of ton-mile.  Likewise, the drought in Panama and the limitation to canal transits have added another bottleneck for global shipping.  Although it’s unknown when these two constraints to shipping will be resolved, one has to recognize that increases of freight rates due to these bottlenecks are not due to structural demand.


A second reason for the strong markets relates to supply chain disruptions due to Covid19.  Although the kinks have been worked out to a large extent, for certain industries, most prominently in the auto industry, still market players are still on their toes, and would rather go long on tonnage and charter more vessels than they would normally need rather than risk getting short of tonnage. Thus, the end tail of the Covid19 pandemic still influences shipping in ways that not necessarily relate to structural demand.


Third, speaking of the elephant in the room, the Russian invasion of Ukraine and the energy sanctions imposed on Russia have upended many trades, from dry-bulk for grains in the Black Sea to LNG tankers and also crude oil tankers, with a small spillover effect on product tankers. While OPEC is struggling to contain production in order to stabilize crude oil pricing, US shale production has been through the roof, with the US a net export exporter.  Once again, changing trading patterns due to exogenous events to the industry, as welcome as they are, they are not necessarily to depended upon for the long term as demand drivers.


Actually, all three major factors supporting shipping for time being generate more uncertainty than ever, which supports shipping; after all, shipping historically thrives on uncertainty. For more than two years now, we have written on the subject of uncertain in shipping and the possibility of having higher highs (and potentially lower lows in a through), which we respectfully believe is the result of the good markets we enjoy at present. From “Look out for volatility in the maritime sector!” in February 2023 to “Shipping: Α surpsingly tame year and the risks that lie ahead” in January 2024, we have made the case for strong markets on the back of uncertainty than fundamentals, mostly.


Still, the fundamentals for shipping look promising for now and for the next two years or so, thus, the current euphoria is not unjustified.  Demand seems solid while tonnage supply cannot expand by much for most sectors in the next two years, thus, there is reason for optimism.  But again, one does not want to be the cart before the horse, no matter how strong the present market is.

The entrance to the Posidonia Exhibit Hall (Karatzas Images)

Thus, Posidonia 2024 have been a positive experience, and an educational as well. And, for some, some eight thousand guests (reportedly), it also has been entertaining as well, with Kylie Minogue headlining the Capital party. No price-tag for the appearance fee was reported which would have mounted to a few million dollars if other appearances offer any guidance.


As we said, the state of the shipping industry is strong, at least as Posidonia 2024 is concerned!


Let’s enjoy the moment!


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