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Container overcapacity and falling volumes to degrade freight market in 2023
Posted on November 25, 2022 |
- Ocean freight rates will drop by 2.3% in 2023, driving carriers to inert their fleets after 2 years, when they squeezed every available ship and container into service.
- The carriers will continue to struggle with overcapacity as volumes see more decline in 2023 which will negatively impact rates in 2023.
- Carriers protected and elevated the rates during COVID, but with too much capacity and eased port congestion on most major trade lanes, spot rates on some essential corridors will drop to below pre-pandemic levels in H1 2023.
- The cost-of-living crisis is worsening consumers' spending power, leaving little appetite for imported containerized goods, as a result, ocean freight volumes are likely to drop further and continue their downturn and if the economic situation declines, it could be even more.
- Steady declines in volumes will result in an “out of balance” situation for the market, which will increase overcapacity by as much as 1.65 million of TEU from new vessels and declines in utilization.