The global container shipping market has been falling for months and with so many variables analysts cannot predict when the slump will bottom out, but the research team at HSBC think that the trough is near and that the shipping lines need to step up their capacity management programmes in the coming weeks.
Container shipping markets are experiencing a steep correction, as demand falls and the containership charter market daily hire rates and asset values impacted, with falls in time charter rates and sales of vessels.
Global demand in TEU has grown just 1.3% since 2019 and demand in TEU miles declined -2%, over the same period, which shows that not only is more capacity getting into the market, as congestion gradually eases, but the demand side has clearly weakened owing to the extremely poor peak season.
Volumes from Asia to North America declined -8% in August on a year-on-year basis while Asia to Europe went down by -7% and while the bottom of the container shipping cycle may be near – HSBC research suggests rate decline is slowing, which the bank attributes to the container shipping lines increasing the number of blank sailings. But it says they will need to step up their capacity management programmes in the coming weeks.
The carriers carriers ‘blank’ sailing programmes across the major East/West trades in the last quarter will effectively see 24 vessels removed, that’s around 500,000 TEU or over 12% of capacity.
Despite the lines actions, the outlook for 2023 is likely to see the market continuing to trend in the shippers favour, with new capacity, port congestion diminishing and schedule reliability improving. Although there will be challenges, particularly around IMO 2023 adoption, increased bunker costs and longer transit times.
We negotiate contracts with carriers across all three alliances to secure space and rates, that provide the best blend of alternatives and options, whatever the situation.
By leveraging contracts and relationships we adapt services, port pairs and routings, to work around blanked sailings and maintain the resilient, reliable supply chains that best serve our customers.