Ratings agency Moody’s has painted a pessimistic picture of an over-tonnaged boxship sector next year.

In the company’s first global outlook assessment for the transport and logistics sector, container shipping stands out as a negative.

Moody’s is expecting a 13% overall drop in earnings for a group of 20 selected shipping, logistics, air and road freight companies in 2024.

“However, the forecast fall in Ebitda is driven mainly by a large expected drop for container shipping companies as their stellar post-pandemic performance fully unwinds,” the agency added.

“Business conditions for container shipping companies will continue to worsen,” Moody’s said.

The company argues the main driver for this is the significant addition of new vessels over the next 18 months, equivalent to the total size of deliveries over the past five years.

This is likely to create another round of overcapacity in the market, weighing on freight rates, the agency believes.

“While the extent of this impact remains uncertain, historical trends indicate a clear downward direction,” Moody’s said.

Some carriers have already reported losses for the first half of 2023.

Operating costs are still high, and the agency expects the final three months of 2023 to become one of the weakest quarters for the industry in many years.

“This is likely to worsen during 2024, when the industry will face substantial overcapacity, unless there is very strong demand,” the company said.

Moody’s pointed to mitigating factors like the scrapping of older ships, slower vessel speeds or cancelled sailings as yet to have an impact, clouding the outlook even further.