Tough times for shipping industry in 2024: Container xChange
While blank sailings are expected to increase, imbalanced container availability may continue in certain regions
The container shipping industry is predicted to grapple with persistently reduced demand and oversupply, potentially leading to fiercer competition, further reduced profits, and possible market consolidation in 2024.
"Although schedule reliability is improving, persistent challenges remain. Blank sailings are expected to rise in response to market volatility while imbalanced container availability, driven by economic crises, may continue in certain regions," says Container xChange in its report titled 2023 Shipping Industry Trends and Future of Shipping in 2024.
Oversupply risks and increased deliveries
The shipping industry faces the risk of oversupply in 2024 as deliveries are set to increase to 2.95 million TEUs, the report added. The surge in deliveries, including Megamaxes and Neopanamaxes, may lead to intense competition, reduced profits, and potential mergers and acquisitions. "Carriers, particularly in North America, are navigating a delicate balance between government-driven demand and rising interest rates. Over-order of ships during the economic boom could create overcapacity, turning 2023's profits into 2024's losses. The sector is projected to face challenges to restore supply and demand equilibrium until 2026."
Geopolitical uncertainties and shifts in trade routes
Geopolitical uncertainties in 2023, including conflicts in Ukraine, Taiwan, and Israel, significantly impacted the shipping industry. "These effects are expected to persist in 2024, with potential consequences for trade routes. The Russia-Ukraine conflict led to the closure
of Black Sea ports, causing congestion and delays in goods transportation. Potential conflicts in the Taiwan Strait and the Israel-Palestine region pose risks to key shipping routes, impacting trading in 2024 and beyond."
China Plus One diversification
While completely disengaging from China is challenging due to extensive electronic supply chains, companies are making strategic moves to relocate final manufacturing and assembly processes outside of China, says the report. Christian Roeloffs, CEO, Container xChange adds: "The China Plus One strategy is anticipated to show more prominent trends in 2024 with companies seeking additional containers to diversify their supply chains."