SSI Research believes that the container shipping market has ended its uptrend and entered a correction phase. Weak consumer demand, China’s opening up, and an abundant supply of new ships are the main factors affecting the port and logistics industry in 2023.
In the port and logistics industry report, the analysis division of SSI Securities Company (SSI Research) said that the boom of the container shipping market ended in 2022 as many previous forecasts, however, the cause was somewhat of a surprise.
Specifically, the Russia-Ukraine conflict caused a supply shock, pushing up energy and commodity prices. Consumer confidence was hit hard by high inflation in importing countries, which prevented the peak season from taking place in the second half of 2022 and the significant drop in transportation demand.
SSI Research believes that in the context of rising inflation, slowing economy, consumer demand will continue to be weak in 2023 and consumption structure will continue to shift from goods to services. In addition, the clearance of inventory needs at least two quarters, transportation demand can recover from the second half of 2023 to prepare for the peak shopping season at the end of the year.
On the other hand, SSI Research believes that the reopening of China and the resumption of international flights is a positive factor for the industry.
However, congestion is possible at Chinese ports in the early stages of opening as a new wave of infections affects port operations. Supply chain disruption can be significantly resolved after China achieves herd immunity.
(The source: SSI Research)
Increased pressure from the supply of new ships is also a factor affecting the shipping market in 2023. According to Clarksons, the total volume of new construction orders accounted for 26.3% of the existing fleet, of which 9%. estimated to be delivered in 2023 and the remaining 16.3% from 2024 onwards.
In addition, the amount of ship supply released when the port congestion is resolved may create more oversupply pressure on the transport market.
On the other hand, two new regulations of the International Maritime Organization (IMO) on reducing carbon emissions from ships (Energy Efficiency Index for Existing Ships – EEXI, and Carbon Concentration Index – CII) take effect. capacity from 2023 will help reduce the supply of ships by about 5% when many ships are forced to reduce operating speed.
SSI Research believes that ship breaking activities will increase again but not enough to compensate for the additional supply of new ships. Therefore, oversupply will put pressure on the container shipping market.
“The downtrend in freight rates will continue in the first half of 2023 and recover slightly in the second half if transportation demand increases.
The domestic market also fell into oversupply similar to the world. Therefore, the domestic freight rates will be stable at a low level and the profit margins of transport companies will decrease”, analyzed by SSI Research.
According to VietnamBiz.vn
