Essentially the container shipping markets continued the declining trend which has been defining the market since autumn 2022. From that perspective the past month was not surprising at all.
Demand remains weak and carriers continue to cancel planned sailings. But despite the multitude of blank sailings, the actual capacity reduction remains insufficient.
On the Asia-North Europe trade, capacity operated in March 2023 was 0.5% higher than in March 2022 and in the Asia-Med trade the capacity increased 28% in the same period.
On the Pacific, Asia-USWC capacity was reduced by 6% in March 2023 compared to 2022 whereas Asia-USEC saw an increased capacity of 21%.
At first glance this appears odd – how can we see large amounts of cancelled sailings, yet at the same time not see a major reduction in deployed capacity? The answer is quite straightforward. The carriers launched a large amount of new scheduled regular sailings in 2021/2022 in an effort to serve the booming markets. However, the supply chain bottlenecks led to many of their vessels getting “trapped” in queues outside ports. This meant that even though the carriers on paper increased the capacity by inserting many new services, the reality was that many of the scheduled departures did not happen as the vessels were not available. The result was a large number of cancelled sailings.
What is happening now is that the resolution of the supply chain bottlenecks has made vessels readily available again. The many cancelled sailings we see now are indeed real – but at the same time there are now fewer cancelled sailings than a year ago. And this leads to the result that despite many cancelled sailings presently, this is insufficient to bring balance to the market – and as a result rates continue down.
At the same time we are beginning to see the impact of new moving parts in the market.
One element is the announcement of the break-up of the 2M alliance. Formally this will only happen in the beginning of 2025, but realistically it will ramp up the competitive pressure already in 2023. As a tangible example, MSC has already announced the launch of a new Asia-Mediterranean service without Maersk.
Another element is the increase in orders for vessels using green methanol – in the past week we have seen additional orders of these from Hapag-Lloyd, CMA-CGM and COSCO. It is still early days, but it would appear that methanol is beginning to position itself as a preferred green fuel for the future. This is positive news for the decarbonisation of the industry, but does carry the downside of feeding additional vessel orders into a market already poised for excessive vessel deliveries in 2023/2024.
A final element to notice is the development towards equipping dry containers with live trackers. Hapag-Lloyd announced last year that they would equip all their dry containers with such IoT devices during 2023 and ONE followed up a month ago with a similar announcement. At the end of March Indonesian carrier Meratus announced their plans to also offer such data transparency to their customers by the end of 2023. This shows we are beyond a tipping point in terms of IoT container trackers. Over the next 12-24 months we will likely see essentially all major carriers having to invest in the technology which will rapidly shift from being a competitive advantage to being seen by customers as something that is expected whenever you ship a container.
Source: Vespucci Maritime
