COVID-19 Pandemic Limits Container Market Growth By 24.6 Million TEU

The container market has suffered a substantial setback due to the COVID-19 epidemic, with 24.6 million TEU (twenty-foot equivalent units) removed from its expected growth trajectory.

Over the last four years, the industry has experienced significantly lower-than-expected global economic growth and a significant fall in the GDP multiplier, which measures market growth relative to economic growth.

The International Monetary Fund initially predicted that the global economy would grow at an average annual rate of 3.5% from 2020 to 2023, similar to the pre-pandemic period. However, the actual growth rate was lower than expected.

Instead, the world economy grew at an average annual growth rate of only 2.6% over this period.

As a result, the container market’s yearly growth rate remained constant at 0.4% from 2020 to 2023, providing an insufficient GDP multiplier of just 0.14. This result sharply contrasts the average GDP multiplier of 1.06 for 2013-2019.

If the above-stated pattern had persisted, the container market would have had a better average annual growth rate of 2.7% from 2020 to 2023, resulting in a surplus of 16.8 million TEU by 2023.

The Covid-19 pandemic affected every part of the globe, with East and South East Asia, Europe, and the Mediterranean suffering the most.

In these regions, the GDP multiplier was negative, resulting in lesser import container volumes in 2023 compared to 2019.

These regions accounted for a large share of the loss, totalling 11.4 million TEU out of the 16.8 million TEU due to a lower GDP multiplier.

The International Monetary Fund’s 2020 to 2023 growth estimates exceeded 3.6% in North America.

Still, other regions failed to meet the projections, resulting in an annual GDP growth rate worldwide that was 28% lower than expected in October 2019.

Overall, if the global economy had continued its previous growth track and maintained the GDP multiplier at pre-pandemic levels, the container marker would have significantly increased, with 24.6 million additional TEU in 2023.

However, the prospects for an immediate recovery remain doubtful, with current forecasts indicating limited growth in global economic development.

Reference: BIMCO

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