Philip Damas, Managing Director of Drewry Shipping Consultants, sheds light on the challenges and strategies container lines will employ in 2024, says an article published on ajot website.
Oversupply Challenges
Damas anticipates oversupply in 2024, leading to methods such as more blank sailings, industrial use of cancelled sailings, slower ship speeds, and potential scrapping of older vessels to control losses.
Predicted Industry Impact
While container lines are expected to record profits of around $20 billion in 2023, Damas foresees a collective loss of $15 billion in 2024 due to oversupply challenges.
Management Priorities
The approach taken by container lines will depend on whether preserving market share or protecting the bottom line is the management’s priority, impacting service reliability and shipping times.
Ocean Freight Buyer’s Market
Damas predicts 2024 to be an ocean freight buyer’s market, offering shippers the opportunity to secure rate cuts, albeit with potential service reliability trade-offs.
Negotiation Strategies
Shippers are advised to focus on securing not only freight rate reductions but also seeking efficiencies and savings beyond rates. Examining surcharges, reducing detention costs, and carefully negotiating contract terms are emphasized.
EU Emission Trading System (ETS) Challenges
Shippers will face new ETS surcharges from carriers in 2024, introducing uncertainties about negotiation, calculation, and adjustment frequencies. Clarity on justified surcharge levels becomes crucial, considering potential surcharge doubling in 2025 and 2026.
Recommended Approaches
Shippers can refuse ETS surcharges, push for inclusion in base rates, or document and scale justified surcharge levels in tenders for transparency and negotiation purposes.
The evolving ocean freight landscape requires shippers to navigate with strategic foresight, focusing not only on rates but also on optimizing operational efficiencies.
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Source: Ajot
