The Lunar New Year, which traditionally sees an extended shutdown of factory production in China, impacting container shipping demand falls early in 2023 and is just four weeks away on 22 January 2023.
While 2021 and 2022 saw a different picture with lines keeping capacity high during the Lunar New Year due to the Covid pandemic, 2023 is expected to see a much more normalised market.
“Given that demand growth has now stagnated, and freight rates are still dropping, it would make sense for the shipping lines to blank additional capacity during CNY (Chinese New Year) 2023 to try and stem the bleeding freight rates,” commented Alan Murphy, CEO of Sea-Intel.
However, the analyst says that this not what is happening and instead an “extraordinary increase” in deployed capacity when 2023 is compared to both 2019 and the average capacity growth rate of 2015-2019.
“Asia-North America West Coast is seeing capacity growth of 35%-38%, Asia-North America East Coast of a staggering 57%-59%, and Asia-North Europe of 28%-42%. Asia-Mediterranean is the only trade lane that is closer to the pre-pandemic levels,” Murphy said.
Listen to the Seatrade Maritime Podcast on the container shipping market outlook for 2023
He described the development as “quite concerning” with the deployed capacity for the 2023 Lunar New Year the same as 2021 when there was surging demand. “If demand continues to be sluggish, or outright contracts, given these capacity levels, freight rates will continue to tumble.”
The fall in demand and spot rates comes at a time when shipping lines are starting to bring onstream significant new capacity in terms of newbuildings.
Murphy repeated a warning he made at TOC Asia in November that cash-rich container lines could indulge in a price war similar to that seen in 2015 – 2016
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