Global Container Shipping Today: More Complex than During COVID?

IEEPA Refund Calculator Investor Relationship Financial Overview Company Overview Financial Overview Corporate Governance Overview Board of Directors Committees Internal Audit Regulations Shareholder’s Insights Shareholder’s Insights Shareholder’s Report Investor Contact Investor FAQ Contact MyDimerco English繁中简中 Home » Global Container Shipping Today: More Complex than During COVID?Global Container Shipping Today: More Complex than During COVID? by Dimerco | May 2, 2024 The current global container shipping landscape, viewed through the lens of freight buyers, rivals the complexity seen during the Covid era. Threats of new US tariffs, shipping and geopolitical risks spanning the Middle East and beyond, and substantial shifts in the liner shipping alliance system are casting significant shadows. But there is no bigger shadow than the one created for shippers and the industry by the Red Sea crisis. That’s the opinion of Hua Joo Tan, Founder of Linerlytica, which provides data driven market intelligence for the container shipping industry. He was a guest on the latest episode of the Dimerco-sponsored podcast, The Freight Buyer’s Club, hosted by Mike King. Mr. Tan feels that the longevity of the Red Sea crisis holds the key to global freight rate levels and the fortunes of container shipping lines in 2024 and beyond. He feels the extra capacity sucked up by diversions of vessels around southern Africa to avoid conflict in the approaches to the Suez Canal was the key factor preventing excess vessel supply sinking freight rates and liner profits. According to LINERLYTICA, more than 3m TEU of newbuilding container shipping capacity is due to be delivered this year, amounting to net fleet growth of over 9% even after adjusting for scrapping. By comparison, the number of vessels now being diverted around the Cape amounts to 330 ships or 4.5m TEU capacity, a figure that will continue to rise through 2024. “There is a shortage of ships in the market, at least for now,” said Tan. “So, the Red Sea situation has been an absolute game-changer for the industry. It has completely turned the supply and demand equation upside down. If the Suez Canal reopened to container shipping it would prompt a complete collapse in freight rates.” However, he added, this scenario is unlikely. “I do not expect to see a quick resolution to the Middle East crisis,” he said. “My base case is that this crisis in the Red Sea is going to drag out for many more months, and perhaps even turn into a multi-year issue, so this is a scenario that I think the market needs to prepare for as well.” According to Bronson Hsieh, Consultant to Dimerco Express Group and former Chairman of Evergreen and Yang Ming, once normal trade resumes through the Suez Canal, carriers will quickly gravitate back to this more economical shipping lane. “Certainly, this will create excess capacity with redundant big vessels serving the Asia-Europe trade lane,” he says. “At that time, voluntary blank sailings will be one of the most effective and customary ways shipping companies will deal with the overcapacity.” Bullish rates outlook Mr Tan also claimed that some analysts and container line executives had been “overly negative” when forecasting freight rate levels for the rest of the year. With respect to container rates for the balance of 2024, Tan said “I don’t see it as all doom and gloom for this year and we have the Red Sea crisis to thank for all this. Generally, I would say that the contract rates for this year will be around 10 to 20 percent higher compared to where we were last year.” The full episode of the podcast delves into strategies for effectively categorizing and navigating the turbulent waters of ocean freight shipping for 2024.  Explore Solutions with Dimerco Express Group Visit this page to view other episodes of the Dimerco Freight Buyer’s podcast, which is produced for anyone with a professional interest in international trade, shipping, procurement, logistics and air cargo. The podcast features leading decision-makers, analysts, journalists, operators, and shippers who share their take on current freight and logistics markets and the challenges and opportunities. Need help navigating today’s ocean freight market or any global logistics challenge? Reach out to Dimerco for solutions and expert guidance. Our team is ready to navigate these challenges and ensure resilience against potential supply chain risks. Post Tags: Asia Pacific | China | Covid-19 Response | Economic Challenges | Freight Forwarding | Multimodal Transport | Ocean Freight | Podcast Episode | Supply Chain | Supply Chain Solutions We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.ACCEPT Cookie settingsManage consent Close Privacy Overview This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. 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