Container shipping to hit bottom in mid-2023 forecasts HSBC

Container freight rates are expected to hit a trough in mid-2023 forecasts HSBC Global Research as spot rates fall at 7.5% a week.

Parash Jain, Head of Shipping & Ports & Asia Transport Research, was one of the first to flag a sharp decline ahead in container shipping’s fortunes at the start of September when he predicted shipping lines profits would plunge by 80% in 2023 – 24.

Far from being overly negative as some in the industry felt at the time Jain has now accelerated the timeline for the sector to hit bottom after spot rates have tumbled far quicker than anyone expected.

In a research note entitled “Fast and furious” HSBC noted spot rates reported by the Shanghai Containerized Freight Index (SCFI) had fallen by 51% since the end of July – a decline of 7.5% per week. It was also highlighted that spot rates were now well below the levels of contract rates entered into at the start of 2022, especially on the Transpacific trade.

“In fact, at this pace of a 7.5% week-on-week decline, spot rates may hit the average spot rates of 2019 by the end of 2022e, a level where we expect capacity discipline to meaningfully emerge, especially when rates go below cash costs,” Jain said.

HSBC has brought forward its expected trough of freight rates to mid-2023 from 2024 with a lower demand forecast and a higher than expected effective capacity increase due to the unwinding of congestion. Sector profitability is set to hit bottom in second half 2023.

The analyst expects Q3 2022 earnings to remain resilient, but profit guidance statements may provide clues as to whether lines have been able to defend contract rates in renegotiations.

“The reactivation of capacity after the Golden Week period vs. extended blanked sailings will likely determine whether freight rates stabilise any time soon,” the research note said.

HSBC has cut profit estimates for listed container lines for 2022 – 24 by up to 51%.

Source: seatrade-maritime

Writer: Marcus Hand 

 

 


Related News

Spot rate carnage could result in more ships laid up, 'with worse to come'
Spot rate carnage could result in more ships laid up, 'with worse to come'

1079 Views

Ocean carriers could be forced to mothball more eastbound transpacific US west coast loops, and the vessels that operate them, to stop the extraordinary haemorrhaging of container spot rates which have halved in value in the past four weeks.

VIETNAM PORTS CONTAINER VOLUMES UP 21% IN H1
VIETNAM PORTS CONTAINER VOLUMES UP 21% IN H1

1937 Views

Container cargoes moved by Vietnamese ports grew by 21% year-on-year, to more than 14.7m teu during the first half of 2021, according to Hoang Hong Giang, Deputy Director of the Vietnam Maritime Administration (VMA).

CONTAINERSHIP ORDERBOOK EQUIVALENT TO THE EXTENT FLEETS OF COSCO, HAPAG-LLOYD AND EVERGREEN
CONTAINERSHIP ORDERBOOK EQUIVALENT TO THE EXTENT FLEETS OF COSCO, HAPAG-LLOYD AND EVERGREEN

1829 Views

More statistics relating to today’s record containership orderbook are pouring in.

According to Alphaliner, there are now just under 900 ships totalling 6.8m teu due to be built at yards around the world.


Comment
  • Your review
main.add_cart_success