SHIPPING rates are collapsing, with drewry seeing a path to soft landing if carriers make the right moves, reports New York's FreightWeek.
A wave of new vessels will hit the water next year, and consumer demand will be struck by a global recession.
Drewry's base case for 2023 is that the ocean carrier sector will post Earnings Before Interest and Taxes (EBIT) of US$100 billion.
That's down 64 per cent from a projected 2022 EBIT of $275 billion but well above pre-Covid earnings.
'The current state of the market is undeniable. The arrows are pointing down wherever you look,' said Drewry container research senior manager Simon Heaney.
'But we don't think this will be a classic case of container market boom and bust. We think that with some skillful maneuvering, there is a path available to carriers to make substantially more money than they did [in the pre-pandemic years].'
Drewry's base case for 2023 calls for demand growth of 1.9 per cent.
On the supply side, it would equate to a 'massive' year-on-year capacity growth of 34 per cent.
'So, doing nothing is not an option. Carriers can't exert any influence on demand. They have no choice but to focus on the one thing they can control: supply. And following consolidation and alliance restructuring, they are now in a much better position to tackle so-called 'danger years' and pull the right capacity levers to ensure a soft landing,' said Mr Heaney.
They've already begun, with multiple services suspended and many cancelled sailings.
The Drewry World Composite Index is still falling, but not as fast as it was recently. 'There's still a decline, but it's much more marginal than it had been,' said Mr Heaney.
'I think we're starting to see carriers turning the corner slightly and getting a little bit more control. Our view is that the groupthink among carriers has been to milk profits for as long as possible then start cutting capacity when rates sink closer to the level that's acceptable in the long run. I think that time is now.'
SeaNews Turkey
A wave of new vessels will hit the water next year, and consumer demand will be struck by a global recession.
Drewry's base case for 2023 is that the ocean carrier sector will post Earnings Before Interest and Taxes (EBIT) of US$100 billion.
That's down 64 per cent from a projected 2022 EBIT of $275 billion but well above pre-Covid earnings.
'The current state of the market is undeniable. The arrows are pointing down wherever you look,' said Drewry container research senior manager Simon Heaney.
'But we don't think this will be a classic case of container market boom and bust. We think that with some skillful maneuvering, there is a path available to carriers to make substantially more money than they did [in the pre-pandemic years].'
Drewry's base case for 2023 calls for demand growth of 1.9 per cent.
On the supply side, it would equate to a 'massive' year-on-year capacity growth of 34 per cent.
'So, doing nothing is not an option. Carriers can't exert any influence on demand. They have no choice but to focus on the one thing they can control: supply. And following consolidation and alliance restructuring, they are now in a much better position to tackle so-called 'danger years' and pull the right capacity levers to ensure a soft landing,' said Mr Heaney.
They've already begun, with multiple services suspended and many cancelled sailings.
The Drewry World Composite Index is still falling, but not as fast as it was recently. 'There's still a decline, but it's much more marginal than it had been,' said Mr Heaney.
'I think we're starting to see carriers turning the corner slightly and getting a little bit more control. Our view is that the groupthink among carriers has been to milk profits for as long as possible then start cutting capacity when rates sink closer to the level that's acceptable in the long run. I think that time is now.'
SeaNews Turkey