33% less freight in 2024? The outlook for the container industry is bleak, not just 2024...

imon Heaney, senior manager of Delury Container Research, on the 24th expressed a "pessimistic" outlook for the liner industry, predicting that global freight rates will fall by 60% this year (including spot freight rates and contract freight rates), followed by a 33% decline in 2024. It added: "This is not just a challenge for 2024, but will be repeated in the corresponding years."

Heaney said operators will face a "relentless challenge to keep rates above costs." "The more severe the cash loss, the more extreme the response of shipping companies, so it is expected to have a certain impact."

The low freight rates reflect the extreme disconnect between supply and demand - Delury's global supply and demand index is set to reach an all-time low, with supply expected to grow by 6.4% next year, while demand is expected to grow by just 2%.

Heaney believes that "it is too late for the ship companies to manage capacity", and while the only viable options to restore balance are still ship dismantling, general slowing down, delaying the delivery of new ships, idling more ships and cancelling more voyages, he concludes that this is "difficult to achieve". He added that even in the most optimistic scenario, "the market is still far from balanced".

Heaney noted that many shipping companies are updating their fleets to comply with environmental regulations, but they are "not phasing out older vessels fast enough, and that's when we start to see pressure."

Ship dismantling is estimated to be only 115,000 TEU this year, and is expected to rise sharply to 600,000 TEU next year.

Overall, shipping companies are expected to post $20 billion in EBIT in 2023, but will lose $15 billion next year, largely because freight rates continue to slide.

Heaney said he now expects that the impact of repealing CBER next year will not be "as large as initially anticipated" and that it will be "minimal beyond short-term legal uncertainty." He sees the main threats as geopolitical issues and "black swan" risks, such as extreme weather events.

In the past few years, whether in 2009 or 2020, port throughput has been able to recover quickly after a decline. However, Drewry said that "we will not see this for the next few years," likens 2022-2023 to the "legacy of a long profligacy" for newly built ships.

The report concludes that an unnatural surge in demand in 2020-2021 leads to an accompanying contraction in consumer spending, and that there will be a long and deep void in the container market even as the global economy moves forward, revealing once again that the relationship between GDP and container volumes has disappeared.