The global demand for deep-sea transportation was weakened by the global COVID19 pandemic. Light vehicle (LV) exports were hardest hit in Q2 but picked up at the end of the year, while the H&H segment was not impacted to the same extent as LVs and rebounded strongly in the second half of 2020.
Light vehicle market
Global LV sales declined by 14.4% in 2020 compared to 2019 and totalled 76.8m units. The global COVID19 pandemic made its impact on all major markets. China, first in and first out of the COVID19 crisis, declined less than the US and European markets and was down 4.7% YoY. In the US, dealers kept open to a larger degree than Europe and sales ended at 14.6m units sold, equal to a decline of 14.6% YoY. Sales in Western Europe were the hardest hit as governments’ attempts to stop the virus led to widespread lockdowns and low LV sales levels, particularly during Q2. For the year as a total, LV sales ended at 12.5m units, down 23.8% YoY.
Global deep-sea LV exports were down about 17.9% from 2019 to 2020, and COVID19 negatively impacted sales. As China has a lower share of deep-sea imported LV volumes compared to other major markets, the deep-sea volume was harder hit than global sales. Light vehicle exports from Europe declined 17.1%, while North American exports declined 18.3% in line with the global LV sales decline. Japanese exports declined 17.3% from 2019, while Korean vehicle exports were down 15.4% from 2019, and thus performed the best of the major export regions. Chinese exports were down 10.8%, although from a low level, and a positive factor for Chinese LV export was new battery electric models gaining attention in Europe.
According to the forecast from IHS Markit, the LV sales outlook for 2021 is an increase of 10% compared to 2020. Sales in the US are predicted to increase by 11% and exceed 16m sold units. Western Europe is expected to see a growth of 12.1% as the region fell lowest in 2020. The base case scenario expects deep-sea volumes to see a stronger rebound compared to global sales. Exports from Japan and Korea are also expected to rebound in 2021. The LV outlook for deep-sea carried volume for 2021 is positive with an expected rebound after COVID19, though continued uncertainty due to trade tensions, governments’ environmental regulations and geopolitical tensions might influence sales.
High and heavy
International markets for agricultural, construction and mining machinery all experienced a tumultuous 2020. Global trade volumes contracted 13% YoY in the first 11 months of 2020, and an estimated 11% for the full year, as volumes rebounded strongly from the pandemic-induced trough in the second quarter.
Global construction machinery trade declined 15% YoY in the first 11 months of 2020. Machinery exports declined to all continents, with the steepest drop recorded in the Americas. Volumes contracted a significant 34% YoY at the height of the pandemic in the second quarter and have since steadily recovered. Activity in the construction sector is still affected by the grip of the pandemic, but there are big geographical differences in both the severity of the downturn and the path of the recovery. A key challenge ahead is the limited visibility in the non-residential segment, where dynamics continue to evolve with altered travel patterns, remote working and accelerating e-commerce. However, machinery demand is expected grow by mid-single digits again over the next couple of years – owing mainly to a low base of comparison.
The contraction in mining machinery demand accelerated in 2020, with global deliveries of surface mining machinery decreasing 32% YoY. Machinery imports declined in all regional markets except for Africa and Oceania. Among mineral groups, only gold mines recorded improving machinery demand. Nevertheless, deliveries in Q4 2020 put an end to eight consecutive quarters of sequential decline. Mined commodity prices staged a very strong comeback from the bottom of 2020 and key commodities like copper, iron ore and gold all yielded prices well within 80% of decade highs towards the end of the year. Crucially, the strengthening earnings potential among miners means that the investment outlook among miners is again improving. Supported by growing orders, machinery demand is expected to return to low double-digit growth in each of the next two years, taking sales back to pre-pandemic levels by the end of 2022.
Compared to construction and mining machinery, agriculture equipment markets enjoyed a much swifter rebound in 2020. End-user demand and export volumes turned positive again in the third quarter, but still left trade volumes down 8% YoY in the first 11 months of the year. Exports contracted to Europe and the Americas, but recorded minor gains to all other continents. The market turnaround was driven by strong commodity price development for key crops, lifting industry sentiment around the world to decade highs. The positive momentum is expected to extend to the years ahead, with machinery sales growing by low double-digit numbers in 2021, followed by mid-single-digit growth in 2022.
The global vehicle carrier fleet totalled 603 vessels (with more than 4 000 CEU capacity). In 2020, seven newbuilds were delivered and 24 vessels were recycled. During 2020 there was one new order above 4 000 CEU. This resulted in an order book that counted only 15 vessels at year-end, seven vessels with more than 4 000 CEU capacity and eight vessels with more than 1 000 CEU capacity – the equivalent of less than 2% of the active fleet. Most of the order book is scheduled for delivery in 2021 and the remainder in 2022.