2023 Shipping Industry Disruptions

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Credit: kurt-cotoaga-unsplash

Recession, geopolitics and costs top supply chain fears, states a Seatrade Maritime news source.

Container xChange survey

Container xChange surveyed 1200 supply chain professionals, asking what disruptions would impact the shipping industry in 2023. 49% of respondents said a recession in the US was a key concern for the freight forwarding industry, followed by geopolitical tensions at 32% and rising operating costs at 22% of respondents.

Some upside was noted by respondents as tumbling freight rates appear to have bottomed out on most trades, but the broader outlook was less positive.

Container xChange surveyed 1200 supply chain professionals, asking what disruptions would impact the shipping industry in 2023. 49% of respondents said a recession in the US was a key concern for the freight forwarding industry, followed by geopolitical tensions at 32% and rising operating costs at 22% of respondents.

Some upside was noted by respondents as tumbling freight rates appear to have bottomed out on most trades, but the broader outlook was less positive.

The war in Ukraine and tensions around China and Taiwan bring the risk of global trade breaking up into blocs dictated by geopolitics, warned Container xChange.

“These high-risk geopolitical tensions could potentially lead to the fractionalization of trade blocks and potentially a world where trade becomes less efficient because you cannot trade with everybody anymore. Trade becomes restricted to blocks. Currently, it looks like there might be two major blocks but in future, there might be more. This will then limit trade and make it less efficient.” said Christian Roeloffs, cofounder and CEO of Container xChange.

On the US economy, Container xChange said that recent events in banking had brought companies including Goldman Sachs to forecast and increased likelihood of recession in the next 12 months,

“Interest hikes by central banks due to sticky inflation has put the balance sheets of many lenders under pressure, essentially forcing them to mark down assets or sell them off at a loss to cover short-term liquidity needs,” said Roeloffs.

Roeloffs noted the collapse of two US financial institutions in the first quarter, an event which rippled through economic markets and caused stress for banks.

“The bank crisis, compounded by the troubles in the real estate sector, negatively impacts interbank lending. Higher cost of interbank lending will lead to tight access to credit for the real economy and this in turn leads to higher risk of recession.”

“This vicious circle of increasing interest rates, rising instability in the banking sector, tightened access to credit, falling commercial real estate values and eventual recession is underestimated by the overall market, and has significant implications for supply chains,” said Roeloffs.

Rising operating costs, driven by energy prices and labour costs, are not expected to fall, with additional pressure from terminal tariff hikes and rising prices for depot space due to tight supply.

Aaron Callahan, the owner of a container trading company based in the US said: “The container market, in general, is very volatile currently, it changes every week, so there is risk in predicting what will turn out after six months. We face high demurrage and detention charges, operating costs, and other charges pertaining to container storage and transfers. The demand is not coming back anytime soon, on the other hand, the capacity and supply of containers is abundant. Most of us are trying to build resilience and consistency in our operations. This is business critical.”

 

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Source: Seatrade Maritime