In the first-of a four-part H2 2023 shipping market outlook series we are focusing on the container sector with Maritime Strategies International (MSI) analyst Daniel Richards.
You can listen to the full interview as a podcast in the player above
Have spot container freight rates stabilised?
Speaking to the Seatrade Maritime Podcast Richards believes that at least for now spot container freight rates have stablised. While there hasn’t been much downward movement he says, “We're still seeing some further erosion of freight rate levels on some long-haul trades”, driven by events such as the threat of a dockworker strike on the US Coast in June.
While Richards believes container spot rates have largely stabilised at present there are no signs of a strong rebound ahead either.
Do contract container rates have further to fall?
Richards says that while new contracts negotiated this year are at much lower rates than those in 2022 they are still above the levels seen in 2019 pre-pandemic.
“If you look at the global container pricing index put out by Container Trade Statistics in May that was around 20%, above where we were in 2019. So that gap, it feels like it's going to close a bit more.” Average rates reported by container lines in their financial results are expected to fall further in Q3 and Q4 this year before starting to stabilise going into 2024.
Newbuilding deliveries and the impact on demand and supply
The expected wave of new vessel capacity has started to arrive in earnest this year. The first quarter of the year saw 360,000 teu of new capacity delivered, and some 600,000 teu of capacity in the second quarter.
“By the end of July we're probably looking at the volume of new vessels hitting the water being equal to what we saw in the whole of last year. And this is not yet being really offset with much in the way of vessels scrapping with only around 65,000 teu of vessels scrapped so far this year. So, it's building up pressure on trade lanes,” says Richards.
Will containership newbuilding deliveries be delayed?
Richards notes that some yards are having issues with shortages of skilled labour which might provide the excuse for some delivery delays. “But so far, the really big Megamax 24,000 teu containerships are arriving at a pretty brisk rate at the moment.”
Listen to the full interview in the app of your choice below
