 The near-term market outlook is strongly positive with increasing expectations of prolonged disruption through 2022, supporting rates: port congestion is not improving (October boxship capacity in ports globally was up 13% on late August 2020) with container shortages unlikely to ease in the short term. An unwind in disruption will bring some negative pressure and easing back of markets from spectacular highs but a slow speed of disruption unwind could provide continued support through to late 2022.

 Demand for goods, particularly in the US, remains strong: The ongoing rebound in the physical economy is supported by unlocked ‘pent-up’ demand with stimulus packages, an improving macro backdrop and vaccine roll-outs inspiring consumer confidence. Global box volumes were up +12% yoy in Jan-Jul 2021. The Transpacfic has been particularly strong, representing >50% of volume growth ytd vs 2019. Inventory to sales ratios are at the lows suggesting restocking requirements may drive exceptionally strong demand beyond peak season.

 A surge in ordering could exert material pressure from newly ordered capacity in 2023: Record markets and positive sentiment has driven a surge in ordering. The orderbook now represents 23% of the global fleet with 4.7m TEU of newbuild capacity contracted since the start of Q4 2020. However this does not represent the same scope for pressure as in 2008 when the orderbook represented >50% of the global fleet. Shipyards are largely committed out to 2024 indicating limited scope for orderbook expansion.