With ocean freight rates hitting rock bottom, it seems shipping lines are subsidising shippers to move their cargo around the world, says Patrik Berglund, CEO of, Xeneta while presenting the 2024 Outlook for Ocean Freight Shipping, says an article published in the logistic update Africa website.
Shipping Lines Subsidizing Amidst Unsustainable Rates
Ocean freight rates have reached rock bottom, compelling shipping lines to subsidize shippers in global cargo movements. Patrik Berglund, CEO of Xeneta, emphasizes the current rates’ unsustainability, predicting an eventual rebound.
Leading carriers, including Maersk, Hapag, and CMA-CGM, report significant declines in Q3 and nine-month 2023 numbers due to various factors, including lower average freight rates.
Financial Strain On Major Carriers
Maersk records a loss for its ocean business, with ocean revenue dropping 56% to $7.9 billion. Hapag-Lloyd sees a 77% decline in group profit at €3.2 billion, and CMA CGM reports an 82% decline in gross earnings. The worsening price outlook prompts Maersk to intensify measures, reducing the global workforce and incurring restructuring charges.
Environmental Regulations Introduce Complexity
New environmental regulations in 2024 pose an additional challenge, potentially limiting carriers’ capacity due to vessel environmental standards. This could result in continued practices like slow steaming and blank sailing.
Container Carriers Face Projected Losses
Container carriers are expected to report a significant loss of $15 billion in 2024, driven by a projected 60% reduction in freight rates in 2023 and an additional 33% drop in 2024, according to Drewry’s Container Market Annual Review and Forecast.
Key Issues And Influencing Factors For 2024
Xeneta identifies six key issues for the container shipping industry in 2024, including consumer spending, capacity and fleet growth, the return of “classic seasonality,” industrial action, the potential break-up of alliances, and an increased focus on sustainability with the introduction of the EU Emissions Trading Scheme (EU ETS). Geopolitical factors, environmental issues, and the ongoing global pandemic are highlighted as significant influencers.
Adapting To An Evolving Landscape
The outlook for ocean freight rates in 2024 suggests a rebound from unsustainable lows, urging stakeholders to stay vigilant and adapt to the evolving landscape. Financial challenges, regulatory complexities, and various influencing factors require a strategic approach to navigating through uncertain waters in the coming year.
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Source: logistic update africa
