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2023 could bring ‘all-out price war’ for container lines

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As container lines fail to support falling spot rates in the second half of 2022, next year could bring an all-out price war as contract rates follow spot rates down.

Online container logistics platform Container xChange said a drop in demand through 2022 had brought a significant oversupply of containers, which is set to worsen in 2023 with more boxes entering the market.

Xeneta said lines have already blanked a considerable number of sailings, and signals from Maersk of continued capacity adjustments on multiple services are expect to be reflected across the industry.

 “In 2023, there is a high possibility of an all-out price war. 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,” said Christian Roeloffs, Cofounder and CEO, of Container xChange, an online platform for container logistics .

“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,” said Roeloffs.

Container xChange noted carriers’ increasing default risk with the example of reports that CHINA United Lines was at risk of defaulting on a charterparty involving more than 10 containerships.

For freight forwarders, the new market dynamic gives them a better hand in negotiations, leading to forecasts of falling contract rates in the early part of 2023.

“Tight grip on costs becomes 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. 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.” said Dr. Johannes Schlingmeier, cofounder and CEO, Container xChange.

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