<\/p>\n
After over two years of rising rates and overstretched capacity, the rapidly cooling ocean freight market looks set for an \u201cextremely challenging\u201d 2023, according to Oslo-based Xeneta. An in-depth analysis of the latest real-time ocean and air freight rates, combined with expert trend forecasts, suggests that ocean cargo volumes could fall by up to 2.5%, rates will drop \u201csignificantly\u201d and weak demand will force increased idling of vessels. The air freight market, analysts predict, will also face a turbulent twelve months.<\/p>\n
Out of balance Xeneta CEO Patrik Berglund says difficult times await stakeholders right across the ocean and air freight value chain.<\/p>\n He notes: \u201cThe 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\u2019d expect ocean freight volumes to drop, possibly by around 2.5%. That said, if the economic situation deteriorates further, it could be even more.<\/p>\n \u201cAllied to dropping volumes we have a growing world fleet, with a nominal inflow of 1.65m TEU of capacity. 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.\u201d<\/p>\n Long-term woes<\/strong>\u00a0 This cocktail of weak demand, dropping volumes and an increase in capacity will, inevitably, impact negatively on rates, says Berglund. He comments:<\/p>\n \u201cWe expect to see significant reductions. 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\u2019ll be fighting losing battles in 2023. We could see spot rates on some key corridors drop below pre-pandemic levels during the first half of 2023, while long-term rates will fall rapidly as older, expensive contracts expire and new, far lower contracts are signed. However, long-term rates will not drop below spot rates during the first half of 2023.<\/p>\n \u201cAs far as upcoming contract negotiations go, it\u2019s 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\u2019t 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\u2019s both opportunity and challenges ahead, in the short- and long-term.\u201d<\/p>\n Fasten your seat belts \u201cTo be fair, a shift in general volumes wouldn\u2019t be too significant for the ocean freight carriers, but it would strongly impact on the air segment, where cargoes are obviously far smaller.\u201d<\/p>\n Berglund adds that increasing \u2018belly\u2019 capacity, with easing travel restrictions, will be supplemented by the arrival of conversion and freighter orders placed during the air cargo peak. This will lead the air segment to join its ocean freight sibling in the overcapacity corner, with, he notes, \u201ca negative impact on load factors and rates.\u201d<\/p>\n Certain uncertainty \u201cI\u2019d like to wish everyone a Happy New Year in advance, but there\u2019s not that much for the industry to look forward to at present,\u201d he states. \u201cHowever, as we\u2019ve seen over the past couple of years, predictions are almost impossible to make in a world that moves ever-faster, so there may be unknown factors waiting in the wings to influence markets.\u201d<\/p>\n He continues: \u201cFor example, what happens if the Ukraine-Russia war comes to an end sooner rather than later? This could drive down certain costs again, giving consumers a positive boost. However, on the flip side, it’s important to always stay on \u2018on your toes\u2019, as we could experience a second economic downturn at the drop of a hat. These \u2018what ifs\u2019 can, yet again, throw a curveball for the industry, just as we saw when COVID hit. If we’ve learned anything in the past couple of years, it\u2019s that planning for the unthinkable \u2018what ifs\u2019 must be top of mind.\u201d<\/p>\n<\/div>\n maritime professional<\/p>\n","protected":false},"excerpt":{"rendered":" After over two years of rising rates and overstretched capacity, the rapidly cooling ocean freight market looks set for an \u201cextremely challenging\u201d 2023, according to Oslo-based Xeneta. An in-depth analysis of the latest real-time ocean and air freight rates, combined with expert trend forecasts, suggests that ocean cargo volumes could fall by up to 2.5%, …<\/p>\n","protected":false},"author":1,"featured_media":32034,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[64],"tags":[],"class_list":["post-32033","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-maritime-news"],"_links":{"self":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts\/32033","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/comments?post=32033"}],"version-history":[{"count":0,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts\/32033\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/media\/32034"}],"wp:attachment":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/media?parent=32033"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/categories?post=32033"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/tags?post=32033"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
<\/strong>From climbing to historical highs during the global pandemic, ocean freight rates have fallen away \u2013 and in the case of spot rates, dramatically so \u2013 since the summer. Xeneta\u2019s market report, built on the foundation of the team\u2019s crowd-sourced data from leading global shippers, suggests there\u2019ll be no change in course for 2023, with challenging macroeconomic and geopolitical outlooks undermining confidence.<\/p>\n
The upshot of that, Berglund explains, is overcapacity, necessitating an increased idling of assets. From a current position of \u201cnext to nothing\u201d Xeneta forecasts idling of up to 1m TEU \u2013 \u201cmaybe even more\u201d says the CEO.<\/p>\n
<\/strong>One area where the ocean freight market may benefit is from a potential reduction in air freight. Xeneta says this segment faces a \u201cbumpy ride\u201d, as lower ocean costs and better scheduled reliability (from easing port congestion and available capacity) may tempt some shippers to make a modal shift. In a climate of increasing environmental awareness, shippers focused on sustainability may also be tempted to switch \u2018general\u2019 cargoes from the skies to the waves.<\/p>\n
<\/strong>In conclusion, the Xeneta CEO underlines the complexity of challenges facing the industry, with economic uncertainty, geopolitical concern (\u201cand not just relating to Ukraine\u201d), on-going industrial action on logistics chains, China\u2019s continued zero-COVID policy and the combination of weak demand, easing congestion and increased freight capacity.<\/p>\n