COSCO
SITC
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Tuesday, 06/12/2022, 10:24 (GMT +7)
1101
Container shipping lines have to compete fiercely in 2023
One million TEU of container lines' capacity could be idle by 2023 as demand falls, freight rates fall and economic confidence deteriorates.
Container ships at the Port of Savannah (Photo: STEPHEN B MORTON/AP)
Freight platform Xeneta said on its 2023 outlook that ocean freight volumes could drop by up to 2.5% by 2023 in an extremely challenging market environment.
Xeneta CEO Patrik Berglund said: “The cost-of-living crisis is eating into consumer spending power, leaving little appetite for imported, containerized goods. With no sign of a global panacea to remedy that, we’d expect ocean freight volumes to drop, possibly by around 2.5%. That said, if the economic situation deteriorates further, it could be even more.”
Exacerbating the economic difficulties facing the market, the global container fleet is expected to grow next year, with an additional 1.65 million TEU capacity joining the fleet.
“Some demolitions will dent that growth, but we still expect an increase in capacity of 5.9%. Even if demolitions double from our current level of expectations, the industry would still be looking at an almost 5% expansion."
Berglund says falling demand and increasing capacity is a classic recipe for overcapacity, a factor that Xeneta predicts will lead to up to 1 million teu idle capacity, “maybe even more.” Current fleet idleness is close to zero after companies hunted for ships to operate during the recent pandemic-induced freight market surge.
“Carriers have proved adept at protecting and elevating rates during COVID, but with too much capacity, and easing port congestion, on most major trade lanes they’ll be fighting losing battles in 2023,” said Berglund.
Spot market rates have fallen and may return to pre-pandemic levels on some routes by 2023, Xeneta said, and long-term rates will drop sharply as the market's peak fixed contracts run out, Xeneta said. term and their replacements reflect new market realities.
“As far as upcoming contract negotiations go, it’s imperative to keep an eye on the very latest market data to obtain optimal value. However, those talks will be difficult for all parties. The carriers will be desperate for volumes, but, at the same time, the shippers won’t have the high volumes that unlock the best prices. What we might see is that Freight Forwarders are the big winners, as they can find a sweet spot, serving the SMEs while playing the short market against carriers. Regardless, there’s both opportunity and challenges ahead, in the short- and long-term,” said Berglund.
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Source: Phaata.com (According to SeatradeMaritimes)
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