The low freight rates reflect the extreme disconnect between supply and demand – Drewry’s global supply: demand index is set to reach an all-time low, with a predicted 6.4% growth in supply versus a 2% growth in demand next year.
Mr Heaney argued that “carriers have left it too late on the capacity front”, and while the only viable options to bring back equilibrium remained vessel demolitions, widespread slow-steaming, delaying delivery rates of new vessels, idling more vessels and blanking more sailings, he concluded that this would be “too big to pull off”.
And he added that given the upmost optimism, “you still don’t get anything near a balanced market”.
Mr Heaney noted that many carriers were renewing their fleet to align with environmental regulations, but they “are not getting rid of the older ones quickly enough”, he said, adding “that’s when we start to see pressure”.
This year’s demolitions are estimated to be just 115,000 teu, with a predicted huge spike to 600,000 teu next year.
Overall, carriers are expected to make EBIT profit of $20bn for 2023, but lose $15bn next year, “as freight rates continue to slide”.
Mr Heaney said he now expected next year’s repeal of CBER not to be “as significant as initially anticipated” and that it will have “very little impact, besides short-term legal uncertainty”. He considers the main threats as geopolitical issues and ‘black swan’ risks, such as extreme climate events.
In previous years, any decrease in port throughput recovered quickly, notably in 2009 and 2020. However, Drewry said “we will not see that in the coming years”, likening 2022-2023 as the “long hangover of a spending splurge” on new tonnage.
It concluded that the unnatural 2020-2021 demand surge caused a subsequent pinch on consumer spending, leaving a deep void in the container market that will last a long time, even while the global economy pushes forward, revealing once more how the relationship between GDP and container volumes has vanished.
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Source: Loadstar
