Container shipping market outlook for 2023

Date Added: 11 January 2023

With our comprehensive portfolio of ocean freight forwarding services, Davies Turner was interested to read a very interesting item about the outlook for the container shipping sector in 2023, published on the Seatrade Maritime News website.

The article, the second part of the publication’s 2023 shipping market outlook survey focusing on the container sector, says that the sector enjoyed an unprecedented boom during the pandemic but the coming year sees a difficult combination of sluggish demand and sharply rising fleet growth.

Seatrade interviewed Maritime Strategies International (MSI) analyst Daniel Richards who tells the Seatrade Maritime Podcast that there are three different elements that are important looking forward into 2023 for the sector: expected trade growth, pace and size of fleet growth, and issues around congestion and capacity.

You can listen to the full interview as a podcast here 

Trade growth outlook

On trade growth Richards says there has been an overbuilding of inventories, pressure on housing markets due to interest rates, and also pressure on consumers disposable incomes. “So, the trade growth outlook, at least for the first half of 2023 is going to be pretty challenging.”

Fleet growth forecast

Speaking about the growth in the supply of tonnage he says: “What is the immovable big object coming down the line for the container market balance is that supply growth is going to accelerate markedly.” MSI forecast 7% fleet growth year-on-year in both 2023 and 2024, and above average growth in 2025. Fleet growth though be as high 10% a year if a high expected volume of scrapping does not take place.

Congestion and capacity

The pandemic has been marked by severe supply disruption and congestion in container shipping, but this is now changing. “You've seen a pretty sizeable loss of effective capacity over the period coincided with the pandemic, and that's now also beginning to unwind,” Richards says.

Container freight rates

The latter half of 2022 saw an extremely sharp drop in spot container freight rates, which are now much lower than contract rates agreed between shippers and lines earlier in the year. Richards noted that data from Xeneta showed definite signs that contract rates were starting to fall.

Richards notes that the level of drop off in contract rates will vary by line, trade focus, and the amount of spot versus contract business they have. MSI does not expect contract rates to fall all the way back to weak market levels in the pre-pandemic era.

For more information about Davies Turner’s ocean freight forwarding and logistics services, which also include an overland groupage option direct to the UK via rail, please contact ocean@daviesturner.co.uk or visit the relevant pages of this website.