Flexibility key for container shippers in 2024

The bottom line revealed in a set of ‘Key recommendations for the 2024 ocean
market’ from Flexport’s Ocean Market Predictions for 2024 webinar is for
cargo shippers to take a posture of flexibility.

The late November web presentation, part of the platform’s Logistics

Rewired series, included a detailed view of supply/demand, carrier economics, and
market dynamics. Anders Schulze, Flexport’s SVP, who heads up its Global Head
of Ocean Freight activities, began his market overview by saying that: “This year,
2023- now coming to an end, has seen an overhang of supply,” which he
contrasted /kənˈtræst/ (v) with the Covid-induced demand surges /sɜːrdʒ/.
Bài thuyết trình trên web vào cuối tháng 11, trong phần của các series nền tảng
của Logistics Rewired, đã bao gồm một cái nhìn chi tiết của cung/cầu, kinh tế vận
tải, và các động lực của thị trường. Anders Schulze, Flexport’s SVP, người đứng
đầu của các hoạt động của Global Head of Ocean Freight, đã bắt đầu bức tranh
tổng thể của thị trường bằng việc nói rằng: “ Năm nay, 2023 – bây giờ đến cuối
năm, đang có một sự dư nguồn cung,” cái mà ông ta đã làm nổi bật sự tương phản
với các sự tăng lên của nhu cầu do Covid gây ra.
Looking ahead, Flexport’s presentation pointed towards “The 2024 market is
expected to look similar to 2023 as capacity continues to outstrip demand by 15-
25%.” Schulze, looking at forecasted vessel deliveries, pointed to an estimated
“addition of 13% to the fleet in 202,” which he noted is higher than historical
averages.
Nhìn xa hơn về phía trước, bài thuyết trình của Flexport đã chỉ đến “ Thị trường
2024 được mong đợi tương tự như năm 2023 khi công suất tiếp tục bỏ xa nhu cầu
đến 15-25%.” Schulze phát biểu, việc nhìn vào đợt giao tàu được dự doán, đã chỉ
ra một ước tính “ sự tăng thêm 13 phần trăm của đội tàu vào năm 2024,’’ cái mà
ông ta đã ghi chú là cao hơn các trung bình được ghi nhận trong lịch sử.
Speaker Lars Jensen, CEO and Partner at Vespucci Maritime, parsed /pɑːrs/
Schulze’s numbers slightly- commenting that “slippage” of newbuilding deliveries
would bring fleet additions to around 8% to 10%, which, he said, “is not an
extreme amount of capacity growth- on top of demand.” Jensen also said that he
anticipated that: “Scrapping will pick up, but it’s not going to save the day.”
Lars Jensen, CEO và là cộng sự tại Vespucci Maritime,
Against the backdrop of the capacity build, cargo interests’ inventories have
normalized, and rates have moved down to pre-Covid levels. Lars Jensen, talking
about the carriers, in the Pacific trades, said, “It is exceedingly likely, with no
exceptions, that all the carriers will be loss making in Q4, 2023”.
The cargo side of the marketplace needs to anticipate and react to the strategies of
the carriers; Schulze pointed to increased “blanking” of scheduled sailings in
recent years. His colleague, Nerijus Poskus, Global Head of Ocean Procurement,
said that: “Transpacific carriers are quite good at managing capacity.”
The presentation, highlighting Pacific runs, showed that carriers are blanking 15-
20% of planned sailings - in some weeks 50% of planned voyages - and that slow
steaming is continuing. The bottom line (based on Asia/USWC and Asia/ North
Europe) is that effective capacity is around 80% of available slots. “This is why
rates in the Pacific are holding up a little bit better than the rest of the world,”
Poskus said.
Jensen, talking about 2023, said that the actions of the carriers have been “too
little, too late” following rates that had “been dropping through the floor during the
non-existent peak season.” Poskus is forecasting more inefficiencies for 2024- with
longer loops in the Pacific, encompassing more ports, and the chances for impacts
of delays to snowball.
Jensen brought up another set of factors that make planning more difficult; the
carriers networks may be changing- “and carriers might even be changing the
partners they are working with”. The presentation noted that: “The future of carrier
alliances is uncertain as European Union regulations are set to change in 2024”,
with exemptions allowing collaboration expiring in April, 2024.
The macro picture is full of unknowns, including the end- September expiry of
longshoreman contracts along the US East Coast, the ongoing drought conditions
at the Panama Canal, wars in the Middle East and Ukraine, and continued
geopolitical skirmishing possible between the US and China.
What to do? Flexibility looms large, with Flexport suggesting that the cargo side
needs to build resiliency into their strategies. The presenters highlighted the need
to diversify contract maturity (spot, floating, and fixed), diversify their carrier
choices (to minimize the impact of being on the wrong side of blanked sailings)
and also to diversify service types- as the number of premium services have grown.
The recommendation is for cargo shippers to: “Use transit time and price
differentiated services to optimize growth and profitability.”