There is little cheer for boxship owners and operators in Clarksons Research’s latest sector overview.
The research division of UK shipbroker Clarksons has a negative outlook for the rest of 2023, and worse could be to come in 2024.
Container shipping markets remain sharply down from the record highs seen in 2021 and 22, returning to more normal territory.
In recent months the freight market has seen fluctuating trends and some divergence between trade lanes, while the vessel charter market has seen fresh declines through July and into August, the company explained.
“While some support could remain in parts of the market, building supply pressure and persisting demand headwinds are expected to lead to further softening in containership markets going forward,” the report said.
“The outlook for container shipping markets in the rest of 2023 is negative,” Clarksons Research added.
MPC Container Ships chief executive Constantin Baack has talked this week about “choppy waters” ahead for the sector and this is certainly borne out in Clarksons’ latest research.
The Shanghai Containerized Freight Index (SCFI) for spot freight rates was sitting at 1,044 points by mid-August after some recent gains, up 12% since the start of July, but still down more than 70% from a year earlier.
“Meanwhile, container ship charter rates are under renewed pressure, with our time-charter rate index slipping to 90 points by mid-August, down 12% since start-July and now at the lowest level since December 2020,” Clarksons Research said.
Fixture periods have also contracted, averaging 11 months in July, down from 17 months in June.
Pressure to increase in 2024
Charter rates are expected to continue to soften as supply growth continues to build and more vessels are redelivered.
The outlook for 2024 remains for continued pressure on markets, with rates moving further downwards, the company added.
Further softening is expected given a second consecutive year of firm supply growth, with capacity set to increase by about 7% despite more recycling.
Slower vessel operating speeds should continue to absorb some capacity, however. Vessels are steaming 4% more slowly so far this year versus the 2022 average, the company’s figures show.
Clarksons Research believes markets could potentially reach a “floor” once macroeconomic headwinds start to subside.
“Pressure on global container trade has eased recently, with volumes also seasonally firmer through the summer, but headwinds remain in key regions and a material global rebound has not yet been seen,” the company said.
“2023 is clearly set to be another weak year, though a full-year decline looks narrowly avoidable,” it added.
The latest projection is a fractional 0.1% rise in teu volumes and a 1.1% hike in teu-miles.
A moderate rebound is projected for 2024 of 3.6% in teu terms.
