Significant market volatility could continue to disrupt container shipping prices into the new year.
According to a market forecast issued by online container logistics platform, Container xChange, shipping lines continue to reduce vessel capacity and suspend services by considerable blank sailings, with a significant oversupply of containers and a further influx of more TEUs in 2023.
“In 2023, there is a high possibility of an all-out price war,” said Container xChange Cofounder and CEO, Christian Roeloffs.
“It doesn’t seem that the capacity restrictions that we have seen in the past two years are due to return, so we’ll just have ample capacity both on the vessel as well as on the container side.
“With the competitive dynamics in the container shipping and liner industry, I don’t expect especially the big players to hold back, and we do expect prices to come down to almost variable costs.
“We also foresee market consolidation.”
Container xChange explained that this is starting initially with carriers defaulting and reducing their fleet.
According to Roeloffs, the industry will continue to see efforts towards diversification of supply chain sourcing and manufacturing out of China.
“This is a long-term view, and it will need vision and strategy from companies looking for a more resilient supply chain,” he said.
“We will witness increased container volumes intra-Asia and more countries will emerge as potential alternatives like Vietnam, India and more.”
Roeloffs said that in an environment where there will be tighter margins for freight forwarders and traders, the cost is going to be a significant factor going forward.
“Leaders will look for ways to efficiency and business sustenance,” he said.
“Technology offers a great opportunity for leaders to minimise risk with data visibility and transparency while also maintaining a healthy partner portfolio that helps greatly in testing times.”
Container xChange Cofounder and CEO, Dr Johannes Schlingmeier, said tight grips on costs will become paramount for freight forwarders into the year 2023.
“While on one hand there will be a great deal of negotiation with shipping lines and on the other hand, operational cost optimisation will be crucial for the forwarders,” he said.
“There will be careful monitoring into the demurrage and detention charges for instance, insurance charges, claims etc.
“As capacity on the ocean side becomes more abundant, there is a valid business case for using SOCs which not just offer flexibility but greater control to the forwarders.”
Container xChange said these findings are a natural reaction to what the market has experienced during the past three years, with factors such as Covid, lockdowns and the war in Ukraine taking effect.
“Container prices skyrocketed soon after the pandemic hit because there were not enough containers to fulfil the rising demand and that’s when retailers and importers started to stock much more in advance to avoid the historic port congestions,” it said in a statement.
“The pre-peak season in 2022 saw record container throughput in import-heavy ports. Now that the stocks have been filled, the demand is plummeting.
“The shipping industry will survive this, and we will again start to see normal activity levels in the future, though not immediate future.
“The good part is, that the worst is behind us.”
In other news, the Belledune Port Authority (BPA) has signed a Memorandum of Understanding (MOU) with Germany’s largest seaport, the Port of Hamburg, to collaborate on the movement of dry and liquid bulk commodities and manufactured products between Canada and Germany.