An outlook for 2023 amid increasing market volatility
March 2023

I have spoken many times over the last year about how the Covid-19 pandemic and the supply chain shock it caused, combined with the War in Ukraine, mean that we in the tanker shipping business can never rest on our laurels.

The volatility of the global economy is something we all feel in our personal and professional lives. When you look into the medium term and throw the challenge of decarbonisation into the ring, the future landscape looks murkier than at almost any point I can remember, save for the 2008 financial crisis.

This was a central theme of my discussion with Splash 24/7 a few weeks ago, and I would generally reiterate what I said there: I don’t believe that anybody yet fully knows how reshaped global energy flows will benefit certain vessel types, or how the general health of the global economy will hold up.

However, offering some thoughts about the future is nevertheless something that I am asked about by colleagues and peers. Therefore, I want to take some time to dust off the crystal ball and provide some early reflections on how the current macroeconomic situation may continue to unfold.

In the near term, I believe demand will continue growing faster than supply across this year and next. This will be driven by a few factors, including some hope that China will return to sustained economic growth and will help to increase global demand for oil products. This means freight rates, time charters, and second-hand ship values will all see some further gains.

Tonne mile demand will continue to creep upwards as the ban on Russian oil and oil products continues to prompt all of us to increase our average sailing distances.

These demand factors are being pitted against extremely limited fleet growth, sustained low orderbooks for new tankers, and – in all likelihood – slower sailing speeds prompted by CII; all of which will constrain supply. On the latter point, it will be interesting to see how much of an impact slow steaming actually has on commercial fundamentals.

While those fundamentals look good, a potential decrease in economic growth and the new and emerging volatility we see will impact cargo demand, even as those forces threaten to tip parts of the world into an outright downturn.

The evolving situation in Ukraine will also clearly continue to have its effects. Last year, UNCTAD produced an extremely well thought out report on the impact of the Russian invasion on maritime trade. As the report says, “disrupted regional logistics, the halting of port operations in Ukraine, the destruction of important infrastructure, trade restrictions, increased insurance costs, and higher fuel prices… have contributed to a more costly and unpredictable global trading and shipping environment.”

I think costly and unpredictable are the key takeaways. In a few years, we may look at 22-23 as the year that the starting gun was fired on a radical transformation for the global trade map. It’s easy to get caught up in the ‘hype’ around topics such as deglobalisation – and the potential for a more regional global trade system is something that I intend to share my thoughts on at a later time - but my initial reflection would be that there are some truths that we must begin to prepare for. To some degree, this has already started, first spurred by COVID and pushed even further by the war in Ukraine. Throw in the main factor of cleaner and more efficient transportation regionally and locally, and you probably have the recipe for less overall demand for global transportation movements.

The nations that currently produce energy and export it worldwide may not be the nations that do so in the future. In twenty years, there will still be a requirement to transport oil products safely and sustainably around the world. But will we also transport e-fuels from Chile to China, as one example? I am a firm believer that we will.

On a fundamental level, shipping exists to respond to global demand for the transportation of goods. I have no doubt that Stena Bulk’s vessels will remain as suited to our customer demands if we are calling in Puerto San Antonio or Port Klang. Nevertheless, it makes some sense for us to begin to consider these factors today – and particularly in the context of profound and increased market volatility.


By Erik Hånell, President & CEO of Stena Bulk
March 2023