The global demand for deep sea transportation developed favourably in 2017 with modest growth for auto exports and some recovery in the global high & heavy equipment markets.
Global auto sales increased by 2.5% in 2017 and totalled 94 million units. The US economy continued to develop positively, however auto sales for the US market were moderately down in 2017 but remained at healthy levels in absolute terms with 17.2 million units sold. Sales in Western Europe continued the positive trend and were up more than 2% from 2016. China again contributed to the largest sales gain in absolute terms, as 2017 was the last year of a temporary tax cut related to auto sales. Auto sales in Brazil and Russia turned a corner in 2017 with double-digit growth figures, but from very low levels.
Global deep-sea auto exports were up about 1.5% from 2016 to 2017 with increased momentum at the end of the year. Auto exports from Europe developed steadily, as demand for premium brands remained solid in many parts of the world. North American exports continued to increase, mostly due to new volumes out of Mexico. Japanese exports increased modestly from 2016, while Korean vehicle exports continued the negative trend, down 8% from 2016, mainly driven by reduced volumes to the Middle East and the Americas. Chinese exports increased in 2017 as Western brands started to export from Chinese production sites. Domestic Chinese OEMs still produced low volumes for export which were mainly delivered to emerging markets.
The sales outlook for 2018 is stable with a forecasted growth of about 2% compared to 2017. US sales growth is predicted to continue to be soft, but to remain historically high in absolute terms, as low fuel prices, wide credit availability and a stronger job market are expected to outweigh some of the negative effects of increased interest rates. Western Europe is foreseen to experience a moderate sales growth while Russia and Brazil are expected to extend the positive momentum into 2018. WWL predicts deep-sea volumes will continue to grow as trends from 2017 are likely to continue with new volumes out of North America, solid exports from Europe, and new volumes out of China. Exports from Japan and Korea are expected to stay relatively flat.
High & heavy market
Global sales of large agricultural, construction and mining equipment increased about 5% in 2017, following four consecutive years of decline. Global trade grew by about 15% in the same period, after declining an average of about 8% in the four previous years.
Global construction equipment volumes were key to the turnaround and increased about 15% year-on-year on widespread geographical import growth in the first three quarters of 2017. Growth in global construction spending grew an estimated 3.1% in 2017. North American spending growth slowed while Western European spending accelerated. Asian growth slowed slightly due to weaker Chinese demand, while India and Japan accelerated. Construction equipment manufacturers reported strong growth across most markets throughout 2017, and the growth is expected to continue in the coming year.
2017 represented a turnaround in mining equipment markets. The favourable commodity price development from 2016 continued, and allowed mining companies to reduce debt and increase shareholder returns significantly, but also to invest in machinery. Aftermarket sales and consumables have been key to the improving sales reported by the OEMs, but new equipment is also in increasing demand due to replacement needs. Global deliveries of large surface mining equipment have increased for six consecutive quarters since the bottom in the second quarter of 2016, and deliveries in 2017 increased more than 50% from a year prior in terms of value. The positive development in sales of mining equipment is expected to continue in 2018.
Despite weak agricultural commodity prices continuing to weigh heavily on farm income, global markets for agricultural equipment showed signs of stabilisation in 2017. The North American market decline for the biggest equipment was down 5% in 2017 after dropping more than 20% in 2016. The key European tractor markets of UK, Germany and France all developed positively in the high horsepower categories, but the relative strength was partly disconnected from general end-user demand due to a 1 January 2018 EU registration deadline. The Brazilian tractor market moved sideways after a strong first half of the year, while Australian sales of large tractors remained strong and increased 10% in 2017. Despite regional differences, the overall market stabilisation from 2017 is expected to continue.
The global vehicle carrier fleet totaled 738 vessels with carrying capacity 4.0 million CEUs at the end of 2017, up about 2% from year-end 2016. In 2017, 24 newbuildings were delivered, and 20 vessels were recycled. Although recycling activity slowed compared to last year, 2017 represented the fourth highest year for recycling. 2017 was an uneventful year in terms of ordering of newbuildings, with only two 7,500 CEU LNG-powered vessels ordered. This resulted in a sharp decline in the orderbook, counting only 30-35 vessels, equivalent to about 5% of the active fleet. The majority of the orderbook is scheduled for delivery in 2018 and the remainder from 2019 to 2021.