Page 8 - LUA November - December 2023 for Magzter

SPECIAL REPORT

Ocean freight

RATES WILL BOUNCE

BACK IN 2024…WITH

LOTS OF CHALLENGES

Geopolitical wild cards (Taiwan, for example), environmental factors (Panama
Canal, for example) and global pandemic (Covid, for example) are factors that
cannot be ignored while planning for 2024, reports Jyothi Shankaran.

ith ocean freight rates million) even as ocean revenue dropped period last year on 45 percent decline in
hitting rock bottom, it seems 56 percent to $7.9 billion compared average freight rate to $1,604/TEU.
shipping lines are subsidising to $18 billion in Q32022, driven by Carried volume declined marginally to
W shippers to move their cargo significant pressure on rates in particular 8.92 million TEUs from 8.99 million TEUs
around the world, says Patrik Berglund, on Asia to Europe, North America and in the corresponding period last year.
CEO, Xeneta while presenting the 2024 Latin America trades. Total revenue declined 47 percent to €14.1
Outlook for Ocean Freight Shipping. Maersk has reduced headcount from billion from €26.7 billion in the first nine
“What we can say is that the current 110,000 in early 2023 to around 103,500, months of 2022.
rates are unsustainable. So, the question and, given the worsening price outlook While reiterating its forecast for 2023
is when they will go up, not if they will in the ocean business, is intensifying of group EBITDA in the range of €4.1-
go up," says Berglund. “From what we measures and plans to further decrease 5 billion (previously: €4-6 billion) and
know, there’s little room to go further the workforce by 3,500 positions. Nearly EBIT in the range of €2.2-3.1 billion
down. What’s most likely is they stay a 2,500 positions will be reduced in the (previously: €2-4 billion), Hapag says the
little longer around this level, maybe go coming months, and the remaining forecast is subject to uncertainty given
a little bit down, but they will, for sure, to extend into 2024. This will reduce the many geopolitical conflicts, persistent
go back up.” the global workforce to below 100,000 inflationary pressures, and the continued
All the leading carriers - Maersk, positions. Accordingly, the total expected high inventory levels of many customers.
Hapag and CMA-CGM - have reported restructuring charge is now expected French carrier CMA CGM reported
huge declines in third quarter 2023 and at $350 million, up from $150 million an 82 percent decline in gross earnings
nine months 2023 numbers - due to announced in February. from shipping to $1.6 billion in Q32023
various factors including lower average German carrier Hapag-Lloyd reported from $8.6 billion in Q32022 on 52
freight rates. a 77 percent decline in group profit at €3.2 percent decline in average revenue per
Danish carrier Maersk reported a billion for the first nine months of 2023 TEU at $1,322. Volumes carried were up
loss for its ocean business (negative $27 compared to €13.8 billion in the same marginally (0.9 percent) at 5.9 million

6 LUA NOVEMBER - DECEMBER 2023