 Major box carriers could face a new price war |
Source |
American Shipper |
Post Date |
12/27/2022 |
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Container liners could be thrown into a price war similar to the one disrupting the market some years back, writes Sea Intelligence in its weekly newsletter, in which the analyst firm has examined prospects ahead of the Chinese New Year at the of January 2023.
Overcapacity and an intense focus on low prices were among factors behind the collapse. That same year, Maersk booked a deficit of USD 376m. The Danish major had played a leading role in the price war, lowering rates to def market shares. Maersk has since abandoned the ambition of being the largest liner company. The industry at large is most likely not interested in a new price war. But according to Sea Intelligence, container carriers nonetheless keep on adding new ships at sea, which in light of the falling demand ”does not make a lot of sense.”
Sea Intelligence argues that, due to crashing freight rates and the rapidly approaching Chinese New Year, logic would dictate carriers to ”blank more sailings than usual, and try to get the freight rates back on track; or at the very least, stem the bleeding.” However, this is not about to happen. Overcapacity before, during and after the Chinese New Year from Jan. 22 to 27, 2023, will ”be higher than the deployed capacity in 2021, when demand was absolutely surging,” and the number of blank sailings seems likely to be even lower compared to that period.
According to Sea Intelligence, it currently looks as if capacity in relation to the Chinese New Year will move pass 1.35 million teu. If that holds true, and the fall in demand continues, ”freight rates will continue to tumble as they have been over the past few months now.” Carriers are banking hard on routes across the Pacific Ocean and between Asia and Northern Europe. In fact, only routes between Asia and the Mediterranean Sea show a capacity reduction similar to the ”’normal’ years” before the pandemic. ”Given that we are now only a month away from Chinese New Year, it would take a herculean effort from the shipping lines to announce enough blank sailings to bring offered capacity back in line with the historical years,” reads the analysis. ”This is all the more important, given the weakness on the demand side of the equation,” Sea-Intelligence writes.
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