Container shipping faces a normal down-cycle this year
Monday, January 9, 2023
Significance
Capacity will gradually increase as supply chain bottlenecks are resolved and new container vessels are delivered. The demand-supply imbalance will lead to significant overcapacity and sharply declining freight rates.
Impacts
- Digitalisation initiatives will be ended if they do not deliver tangible business value; Maersk and IBM’s Tradelens project is an example.
- Cancelled sailings will rise as demand and freight rates drop sharply, making it trickier for firms to maintain a stable supply chain.
- Importers are switching to 'China+1' sourcing which will put pressure on supply chains across South-east Asia and the Indian subcontinent.
- Container shipping lines will post record results for 2022 but could suffe losses in 2023 depending on the timing of the market rebound.
- Weaker financial results for container shipping lines may cut merger and acquisition activity between shipping lines and logistics firms.
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