Shipping Industry Trends in 2023

11.29.2023

The shipping industry in 2023 is characterized by cautious consumer spending and sluggish container demand growth, coupled with the looming risks of oversupply

1. Due to cautious consumer spending, low growth in container demand in 2023 and beyond Due to longer-term factors such as inflation, increased interest rates, and a structural shift of consumer spending patterns from goods to services, cautious consumer spending in 2023 is likely to extend into 2024.

2. Deliveries increasing to 2.95 million TEUs pose risk of oversupply in 2024 The pace of deliveries picked up this year, expected to go higher throughout 2024, and stay strong in 2025. 2.48 million TEUs was set for delivery this year, 2.95 million TEUs next year, and 2.26 million TEUs in 2025.

3. Geopolitical uncertainties leading to shift in trade routes in 2024 The Russia-Ukraine conflict and a potential China-Taiwan conflict could disrupt global trade in 2024, especially by closing the Taiwan Strait, increasing costs and vulnerabilities. The Israel-Palestine conflict poses risks to key shipping routes.

4. China plus one diversification to become more evident in 2024 An increasing number of companies are making strategic moves to relocate their final manufacturing and assembly processes outside of China, while still relying on Chinese suppliers for essential raw materials.

Impact and potential scenarios in 2024

1. Reduced demand and oversupply intensify competition, leading to lower profits in 2024 Competition in the shipping industry has long been a key factor affecting profitability. In 2023, Maersk and MSC announced that their longstanding 2M alliance, set to expire in 2025, would not be renewed, marking a significant shift in the maritime industry. The repercussions of this decision are expected to have a lasting impact throughout 2023 and 2024.

One possible outcome is that the maritime sector, especially as it enters a phase of potential overcapacity, could witness a fierce competition for market share among carriers.

2. Container line schedule reliability on the rise, yet challenges persist Container line schedule reliability is continuing to improve returning to pre-pandemic levels. The current situation is better than a year ago when 79% of ships arrived with an average of 7.9 days delay.

3. Blank sailings to increase in 2024 as market volatility persists Although they were more organized in 2023 than last year’s sporadic cancellations, blank sailings are still used to stabilize market rates and exert upward pressure on specific trade routes, fueled by surging market demand and carrier actions.

4. Container availability to remain highly imbalanced in 2024

The excess of inbound containers this October is also evident in the Container availability Index (CAx) which measures the inbound and outbound containers at any given port.

There is significant cargo movement from China into Russia but very scarce movement back to China from Russia. Containers are piling up in Russia which means that the secondhand container prices are very low in Russia.

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