The latest market report on the container shipping industry indicates that global container transport volume is projected to grow between -0.5% and 0.5% in 2023, and between 3.0% and 4.0% in 2024. The volumes on headhaul and regional trade routes are expected to slightly increase, with growth rates of 0.0% to 1.0% projected for 2023 and 3.5% to 4.5% for 2024.
The recovery of trade volumes on key routes may be delayed until 2024 due to financial constraints faced by businesses and consumers.
The global Purchasing Managers’ Index (PMI) for the manufacturing sector has been in contraction territory (below 50) for 10 out of the past 11 months, indicating weak manufacturing activity.
Despite improvements in consumer confidence in the European Union and the United States, retail sales have not shown significant growth. Retail turnover in the EU and the US has remained below 2022 levels so far this year.
Inventory levels in the United States have recovered to pre-pandemic levels, but the inventory-to-sales ratio in manufacturing and wholesale remains higher than pre-pandemic levels, suggesting further inventory adjustments may be needed.
The water level in the Panama Canal is currently low, which may lead to cargo being shifted to the US West Coast to reduce the number of required vessels.
New vessel deliveries have reached historic highs this year, and there are still a significant number of new vessel orders, with new records expected for deliveries in 2023 and 2024.
Average vessel speeds have increased but remain lower than the same period last year, and they may further decrease with the delivery of new vessels.
The lower water level in the Panama Canal is impacting fleet operational efficiency, potentially resulting in reduced cargo volumes, particularly on routes to the US East Coast. While significant delays have not yet been observed, delays and localized congestion may occur, affecting overall fleet efficiency.
Capacity supply is expected to increase by 10.9% in 2023 and 2.8% in 2024. The decrease in vessel speeds will result in capacity supply growth being lower than fleet growth.
The supply-demand imbalance has already impacted freight rates, charter rates, and secondhand vessel prices. The global price index indicates that average freight rates declined by 61% year-on-year in June 2023, average time charter rates were 75% lower than the same period last year, and average charter periods were halved. Secondhand vessel prices also decreased by 47% year-on-year.
Based on supply-demand projections, time charter rates and secondhand vessel prices are expected to face downward pressure. Temporary support to freight and vessel prices may come from seasonal demand fluctuations, but the overall market trend is unfavorable.
These are supplementary details regarding the market report on the container shipping industry.