Sam Chambers May 16, 2023 Splash 247.com

Dubai-listed logistics company Aramex has signed a joint venture agreement with Abu Dhabi’s fast expanding AD Ports Group to create a non-vessel owning common carrier (NVOCC).

The new entity, in which Aramex will have a 49% stake, will provide ocean-bound container cargo services, with a target of 10,000 containers in the short-term, with further growth over the medium to long term.

AD Ports has been very busy expanding its revenue streams in recent months, forming logistics tie-ups with a number of Central Asian nations, entering the tanker sector, bolstering its dry bulk fleet, alongside a host of new port concession agreements. 

 Sam Chambers May 29, 2023 Splash 247.com

Container shipping has been relying on one of its top tricks in its playbook to rein in the worst of the markets by going super slow. 

According to Clarksons Research, the container fleet moved at all-time slow speeds in Q1, with analysis from BIMCO suggesting that ships could go slower still. 

During the covid pandemic liner operators increased the average sailing speed by up to 4% due to strong demand and widespread port congestion. Today, the situation is very different and in the first quarter of 2023 the average sailing speed slowed to 13.8 knots, down 4% year-on-year, with BIMCO suggesting this speed could drop by 10% before 2025.

Jan Tiedemann, an analyst with Alphaliner, confirmed that liner services had been slowing down, partly to absorb capacity that would otherwise be surplus. Nevertheless, in recent weeks, in line with falling bunker prices, there has been a slight uptick in the average speed of the global liner fleet, according to the latest data from Alphaliner.

Over the entire world box fleet in the last two years, average speeds went down by about one knot, according to Alphaliner data. 

“That does not sound like much, but from a 16.5 knot global average, that is about 6% slower meaning, you need X% more tonnage to carry the same cargo volume,” Tiedemann told Splash. 

“The slowing down of services is a well-used tool in the carriers’ toolbox. For the past couple of decades we have seen this used whenever there is either structural overcapacity or high fuel prices – or both. Presently the industry is facing both issues,” explained Lars Jensen, the founder of container consultancy Vespucci Maritime.

Significant amounts of new capacity are being delivered into a market with sluggish demand growth. 

At the same time, Jensen pointed out that new environmental regulations as well as coming carbon taxes have the same impact as increasing fuel prices.

The record avalanche of newbuilds coming from yards in Asia are being injected into services, which are moving slower and slower. 

Maersk and MSC, for instance, announced this month they would be injecting nine additional vessels into the Asia-Europe trade, while at the same time adding that these services would be moving up to three days slower than before, thus absorbing all the new capacity. 

With liners expecting challenging conditions to persist for a significant amount of time thanks to sluggish demand, and an extraordinary orderbook to deliver, carriers have been adjusting their fleets to go slower. South Korea’s HMM, for instance, announced last month a decision to replace the propellers of six containerships with more efficient ones specially designed for slow steaming. 

The transition to new fuels such as LNG, methanol and ammonia also favours slow speeds, since these fuels will be much more expensive than current ones, observed Tiedemann from Alphaliner.

“This shifts the capital cost / bunker cost balance, so that it makes sense to deploy extra ships but save fuel,” he explained.  

Following record profits throughout the pandemic, liner shipping’s fortunes have been on the slide for the last 11 months. Israel’s ZIM and Taiwan’s Wan Hai became the first large liners to post a quarterly loss since 2020 this month. Overall, however, the slow streaming kept the red tide at bay for most carriers with John McCown, the head of Blue Alpha Capital, reporting on Friday that the container shipping industry made a net income of $13bn in Q1. 

 Sam Chambers May 25, 2023 Splash247.com

Stagnating trade and a ballooning surplus of shipping containers, following easing of pandemic era supply chain constraints, has led to a collapse in newbuild container output, which is forecast by UK consultants Drewry to slump to its lowest level in 14 years.

Drewry estimates that global box production contracted 71% year-on-year to 306,000 teu in the first quarter of 2023, the lowest level since the same period of 2010. While some recovery is anticipated through the remainder of the year, full-year output is not expected to exceed 1.8m teu, the lowest level since the recession-ravaged year of 2009, according to Drewry’s Container Equipment Forecaster.

Currently, several factories in China are either closed or operating on significantly reduced working hours, with full-scale production expected to commence in June. Meanwhile, commercial production at two new plants in Vietnam is not expected to start before Q3 this year with output scaled back from original expectations. The Hoa Phat Group factory in Cai Mep and the joint venture plant between Ace Engineering and Seojin Systems in Haiphong together will have the capacity to produce 600,000 teu a year by 2026.

Meanwhile, this year has seen record returns of containers to leasing companies, while carriers have been busily disposing of ageing and surplus boxes in their owned fleets. Currently, the priority for most container owners is to adjust their equipment pools to better match current trading and vessel supply parameters, and to remove ageing or damaged boxes that have accumulated as a consequence of supply chain congestion over the period of the pandemic.

Drewry expects such retirements to match last year at around 2.8m teu in 2023. Despite high levels of disposals into the secondary market, used dry freight container prices have held up well and are expected to remain steady through the year.

As a consequence, the global fleet of containers is forecast to contract 2% this year to 49.9m teu, representing the first fall in 14 years. The global container shipping trade is expected to remain weak, expanding just 1% in 2023, but a recovery in cargo demand is anticipated in subsequent years as the global economy gathers momentum.

This together with an expanding vessel fleet will drive increased demand for newbuild shipping containers, with output forecast to more than double next year, according to Drewry’s latest assessments. This will return the global shipping container fleet to modest growth, which is forecast to expand at an average annual rate of 2.9% over the period to 2027.

in International Shipping News 22/04/2023

“Change is afoot in China,” according to Wood Mackenzie principal economist for the Asia Pacific region, Yanting Zhou. With economic growth slowing, rising political tensions between China and the US, and global supply chain restructuring, ‘disruption’ is batting at China’s external markets.

“The new government has much to do to accelerate the recovery of the Chinese economy,” Zhou said. As it shuns US trade and investment in favour of neighbouring Asian economies, China must boost its domestic consumption.

In a research note, Wood Mackenzie analysed strategies and policies for the new government as it deals with four major changes in the Chinese economy.

The first change refers to the new government and new policies. At the March 2023 National People’s Congress, Xi Jinping was re-elected president and Li Qiang became China’s new premier. “Although the top leader is unchanged and the long-term strategy of ‘dual circulation’ persists, we expect there to be changes to the government’s short- to medium-term policies to support the recovery of the Chinese economy,” Zhou said.

Second is the reopening of the economy. The government has set a “lower-than-expected” gross domestic product growth target of 5% for 2023. “While we think this target is somewhat conservative, it could also mean that China will face more challenges in recovery and that government support will be below expectations.”

Wood Mackenzie forecasts GDP growth of 5.5% this year, although it concedes that if China really pushes to make up ground lost during the pandemic, 7% growth is “not impossible”. It anticipates GDP growth of 5.1% in 2024.

China’s ‘zero-Covid’ policy hit its economy hard. GDP dropped to 3% in 2022, which affected energy demand with oil consumption and LNG imports dropping. On the flipside, low-cost domestic coal production increased.

External changes

The third change is the shifting external markets. Wood Mackenzie notes that China’s exports are expected to decline in 2023, in line with the global economic slowdown. Data on exports from the first two months of the year confirmed the downward trend: they fell 6.8% compared with the same period in 2022. Also, the souring US-China relationship will come into play, while the wider global supply chain is seeking to diversify from China for cost, security and political reasons.

Wood Mackenzie notes that China has reacted by redirecting trade and investment to the Belt and Road countries. “The country has been promoting the Regional Comprehensive Economic Partnership (RCEP), which came into effect on January 1, 2022,” Zhou said. “China has also been reducing import tariffs in line with RCEP requirements and its eight free trade agreements with countries across Latin America, Asia and Europe.”

Wood Mackenzie notes that the Peterson Institute for International Economics calculated that China’s import tariffs for the rest of world had dropped from 8% in early 2018 to 6.5% by the end of 2022, while taxes for the US had increased from 8% to 21.2%.

However, the analyst notes that beyond the short term, China’s competitiveness will be challenged. “Its cost advantage, especially for middle- and low-end products, is already eroding,” Zhou said. “Consequently, growing domestic demand has become more important ‒ and China has ground to recoup. At the end of 2022, the economy was 3% below where we expected it to be based on its pre-Covid trajectory.”

The final change is the shift from quantity-driven growth to quality-driven growth highlighted by Premier Li. This hopes to address demographic changes, where China’s population fell for the first time in 2022, alongside a slowdown in urbanisation. “To achieve this, however, the government needs a new set of policy tools to support consumption,” Zhou said. “A systematic consumption revival plan is needed.”

While the government has made boosting domestic consumption a priority, specific measures have been thin on the ground. Wood Mackenzie reports that some local governments are providing consumption incentives, for example on auto purchases and coupons for home appliances. However, these are criticised as measures that “merely bring forward future demand and rarely create additional demand”.

“The real challenge for the new government is to raise the population’s willingness to consume and reduce China’s ultra-high saving rates by providing more security to Chinese households,” Zhou said.

Impact on commodities

In its Horizons: The Great Reopening report, Wood Mackenzie examined what the end of China’s ‘zero-Covid’ strategy means for global energy and natural resources. It described the analysed scenarios as “bullish for all commodities”, where finely balanced markets for oil, LNG and coal are leveraged to a super-charge a Chinese bounce.

In the analyst’s China high-growth scenario, increased construction activity would result in China’s oil demand growing by 1.4 million barrels per day (bpd) on the year – about 400,000 bpd higher than its base case. “This additional China demand in a year with very strong global growth tightens the market further,” the report said. Chinese demand for diesel/gas oil and petrochemical feedstocks is also stronger in its high-growth scenario, offset by lower exports of gasoline, jet and diesel/gasoil.

While Chinese LNG imports fell by 16 million tonnes or 20% in 2022, gas demand is now rebounding. “We expect more than 30 billion cubic metres (bcm) (9%) of demand growth, supported by stronger GDP growth and lower prices. However, booming domestic production (up 14 bcm) and continued growth in Russian pipeline imports (up 7 bcm) will constrain LNG imports to 71 Mt (97 bcm) in 2023.” This is 7.4 million tonnes (10 bcm) more than in 2022 and well below the 80 million tonnes imported in 2021.

Meanwhile, Wood Mackenzie predicts a “potential record-breaking year” for global coal demand in 2023. “Our base case sees significant growth in China’s coal demand in 2023: 85 million tonnes (4%) in the power sector and 17 million tonnes (1%) in the non-power sector,” it said. However, with domestic supply expected to increase by 85 million tonnes, the analyst expects only 17 million tonnes of import increases this year. That said, in its high growth scenario, China sets a record for global coal demand, exceeding 2019 demand of 8,512 million tonnes. Most would be sourced domestically, but China would still need an additional 49 million tonnes of seaborne coal, including 40 million tonnes of thermal under that scenario.
Source: Baltic Exchange

06 Apr 2023 By Caixin Global

Two of China’s largest container truck yards near the major port city of Ningbo in Zhejiang province have been filled with nearly 3,000 idle vehicles with no cargo to haul since early March, and the situation could get even worse with the delivery of new vessels. Could overcapacity in the industry lead to a price war?

This file photo taken on 3 January 2023 shows shipping containers stacked at Nanjing port, Jiangsu province, China. (AFP)

(By Caixin journalists Li Rongqian, Qi Zhanning and Kelsey Cheng)

Since early March, two of China’s largest container truck yards near the major port city of Ningbo in Zhejiang province have been filled with nearly 3,000 idle vehicles with no cargo to haul.

Traffic at the Hengpu and Beilun parking lots, which primarily serve the port, has dropped dramatically over the last two years, several truck drivers told Caixin. During the shipping boom in 2021, some drivers would make 27 cargo deliveries per month on average, they said. Now, they’re happy if they can do two a week.

The change only becomes more apparent in the port, where there are so many idle cargo containers that workers have nearly run out of places to stack them. “This area is almost full now, and many of the empty containers are being moved out,” one terminal operator told Caixin.

A combination of factors has led to these mountains of metal boxes piling up at Chinese ports — the low cost of storing containers in China, a surge in their supply during the pandemic export boom, and the immense number of them returning home once the boom faded, Yu Jianhua, head of the General Administration of Customs, said at a 21 March press briefing.

The container pile-up in China is one of the more visible symptoms of the problems in the shipping industry caused by a downshift in foreign trade amid weakened consumer demand and slowing global growth. The situation could get even worse with the delivery of new vessels, leaving analysts concerned that the overcapacity in the industry could lead to a price war that will weigh heavily on the bottom line of some freight carriers.

For China, the problem is with its exports, whose growth began slowing in mid-2021 due to shrinking demand from its major trade partners and the recovery of supply chains elsewhere that has met some of the demand for goods.

Demand sinks

In Shanghai, more 40-foot containers have come into the port than have departed each week since the beginning of the year, according to monitoring platform Container xChange.

Container xChange’s Container Availability Index (CAx) has remained elevated at more than 0.6 compared with readings over the last three years in ports across China, including those in Ningbo and Tianjin, according to a report the platform put out in early February. A reading over 0.5 means that more containers have entered a port than departed over a given period.

Globally, about 6% of container capacity is idle, with a large number of ships filled with empty containers sitting anchored at sea, a person working at a large freight forwarder previously told Caixin in February.

For China, the problem is with its exports, whose growth began slowing in mid-2021 due to shrinking demand from its major trade partners and the recovery of supply chains elsewhere that has met some of the demand for goods.

In the first two months of this year, China’s goods exports fell 6.8% in dollar terms from the same period of 2022, customs data show. While that figure beat estimates and narrowed from December’s 9.9% year-on-year decline, it’s far from a sign that a trade recovery is around the corner.

Exports to the US slid 21.8% year-on-year and those to the EU fell 12.2%. In the US, high inflation cut into household purchasing power, while packed warehouses have forced retailers to cancel orders. In Europe, rocketing energy prices have spurred inflation that has discouraged consumers from opening their wallets.

The slowdown in demand has led to a collapse of ocean freight rates, which are primarily determined by changes in ship utilisation, according to Sea-Intelligence, a research firm. The China Containerized Freight Index, which tracks spot and contractual freight rates leaving major Chinese container ports on 12 shipping routes, began falling in August. The index, released by the Shanghai Shipping Exchange, declined 8.5% month-on-month in February following a steeper 11.2% drop in January.

As of 30 March, the cost of sending a container from Shanghai to New York was down 78% from a year earlier, while the figure for Shanghai to Los Angeles had plunged 81%, according to data published by Drewry Shipping Consultants Ltd., a maritime research consultancy.

Recipe for a glut

In less than two years, the ocean freight market went from one extreme to the other, as resources including ships, containers, trucks and warehouses went from shortage to glut, said Zhang Huafeng, Los Angeles chief representative at Transfar Shipping Pte. Ltd.

The speed of that shift has only made things worse. During the boom of 2021, ocean carriers ordered a record number of shipping containers while retiring fewer aging ones, Drewry Shipping said in a July report. In 2021, the global supply of containers grew by 13% — three times the previous trend — to almost 50 million twenty-foot equivalent units, or TEUs, a standard for cargo capacity in the shipping industry.

Ship owners have found themselves in a predicament that is similar to that of container buyers. When freight rates were surging during the export boom, they spent a lot of their profits on new ships.

However, new container demand has been falling since the fourth quarter in 2021, said one worker at a large container manufacturer, who told Caixin that inventory has been piling up at his factory and others.

The situation is only going to get worse as new ships get delivered, Zhang said.

Ship owners have found themselves in a predicament that is similar to that of container buyers. When freight rates were surging during the export boom, they spent a lot of their profits on new ships.

That has led to some 2.6 million TEUs worth of newly built capacity expected to hit the water in 2023, Drewry analysts said in an October report. “By over-ordering in the boom years, carriers have set themselves an enormous challenge to shuffle and make capacity magically disappear,” they said.

As freight rates have dropped, some carriers have been trying a number of measures to reduce their capacity such idling vessels and cancelling voyages, said DHL Global Forwarding in a late January report.

A total of 366 container ships were left inactive as of 13 February, according to DHL in a 14 March report, citing figures from shipping research firm Alphaliner. That figure is equivalent to 6.2% of the global fleet and up from 5.7% two weeks earlier.

“A choice to allow overcapacity to persist is also a choice to allow for low utilisation, and thus to allow for freight rates to continue to drop. This is a behaviour we know by a different word: A price war.” — Sea-Intelligence CEO Alan Murphy

However, these measures may not be enough because more shipping capacity is in the pipeline.

Some carriers did not adjust their business to the drop-off in demand last year, Container xChange said in a February report this year. “This can only be seen as a choice on the part of the carriers,” Sea-Intelligence CEO Alan Murphy was quoted as saying. “A choice to allow overcapacity to persist is also a choice to allow for low utilisation, and thus to allow for freight rates to continue to drop. This is a behaviour we know by a different word: A price war.” 

Container xChange saw margins tightening for freight forwarders and traders and predicted a period of market consolidation on the horizon.

Some industry observers were also worried that the market downturn could trigger a price war similar to the one that occurred in 2015-2016, which led to the bankruptcy of South Korea’s Hanjin Shipping Co. Ltd., once the world’s seventh largest container shipper.

New players, who entered the market when freight rates were high during the pandemic, could get squeezed out, leading to a further consolidation of the container shipping sector, Xu Kai, chief of the Shipping Informatization Research Department at the Shanghai International Shipping Institute (SISI), told Caixin.

However, major shipping companies are better positioned to fend off any price war that might occur over the next few years, due to their larger shipping capacity and greater economies of scale, said Wu Di, an associate professor at Dalian Maritime University’s College of Transportation Engineering.

Hope on the horizon?

However, some analysts see things getting better as China’s export outlook recovers.

The world economy is recovering, wrote Li Zongguang, chief economist at China Renaissance Holdings Ltd in an opinion piece last month. In February, the global manufacturing purchasing managers’ index (PMI) rose to 50 — a dividing line between expansion and contraction. But China’s official manufacturing PMI survey, new export orders started growing in February again for the first time in nearly two years, with the reading reaching 52.4, he said.

Xu at SISI also believes that global trade demand is set to recover in 2023, and the turmoil seen in the shipping industry will not worsen. Global inflation and interest rate hikes will not intensify, while product inventories in the US and Europe will gradually be consumed, leading to a steady recovery in Chinese exports, he said.

“Compared with the second half of 2022, the shipping market in 2023 will improve,” Dalian Maritime University’s Wu said. According to him, the recovery could be expected in the third quarter of this year, when exports usually tend to rise in anticipation of the Christmas season.

 Sam Chambers April 20, 2023 Splash247.com

Global trade patterns are being remoulded at a fast clip, with reshoring now clearly diminishing China’s dominance in the transpacific box trades.

Covid, a more strident China, tensions along the Taiwan Strait, and the war in Ukraine have all played their part in many companies looking for alternative places to source their goods lately.

Data from Oslo-based freight rates platform Xeneta published today shows the immense growth of Vietnam as a growing source for manufacturing goods bound for the US.

Focusing on the US, the last five years have seen a rise of 26% in containerised imports from Asia. However, of the 12 major economies in the region, China tied with Singapore in recording the lowest growth in these exports, with a 7% increase, according to Xeneta. Hong Kong was the only one of the economies not to grow volumes at all. Vietnam, meanwhile, saw a growth rate of 156% of containerised trade into the US between 2017 and 2022.

A similar trend emerges in terms of the share of imported volumes. In 2022, 56% of all containerised imports into the US from Asia came from China. The apparent strength of this figure clouds the reality that this share has actually fallen by 10 percentage points from 2017. Vietnam, on the other hand, has almost doubled its share, from 6% in 2017 to 11% in 2022.

The International Monetary Fund found that investments by foreign companies into China fell to their lowest level in close to two decades in the second half of 2022. They collapsed by 73% year-on-year, down to $42.5bn. Putting this into context, between the second half of 2020 and first half of 2022, foreign investments averaged $160bn in each half year.

By way of contrast, Vietnam has seen FDIs grow by 61.2% year-on-year across the first three months of 2023, including a 62.1% increase in the number of new foreign-invested projects. The processing and manufacturing sectors attracted the most investment here, accounting for around 75% of the total.

Into this year, the data to the US looks similar, while also highlighting the growth of new markets for Chinese exporters keen to fill the gap left by the Americans.

March saw a clear drop in exports from China to the US, with $3.6bn less trade than the year before. However, despite this significant fall, China’s total exports managed a year-on-year growth rate of 15% in March thanks to booming trade with Russia and countries in south Asia.

Emily Stausbøll, a market analyst at Xeneta, commented: “It takes time to build new production bases and make port infrastructure investments, as we’re seeing in, for example, Vietnam, Cambodia and Singapore, so the impact of investments today won’t be fully appreciated until tomorrow. This implies that the changing trade patterns we’re seeing now could just be the beginning of a far greater realignment.”

A recent study released by global consulting firm Kearney found that as many as 96% of American CEOs are evaluating reshoring as a strategy, an increase of 18% on 2022. Most already have committed to reshoring, or are already reshored.

“We seem to be heading toward a sustained reshoring movement,” said Omar Troncoso, a partner in Kearney’s consumer and retail practice. “Reshoring is becoming both a cause and an effect of companies significantly rethinking how they construct and operate a supply chain that will carry them forward into the next decade.”

Xeneta’s Stausbøll concluded: “Moving forwards, the evidence suggests we’ll see more trade and investment decisions based on geopolitics rather than, say, availability or price. How this progresses, and the speed of change, will be dependent on a range of uncertain factors – not least the escalating tension around Taiwan. So far, Europe has maintained its share of imports from China, with key leaders taking a more conciliatory approach than the US, but another major geopolitical event could transform that.”

 Sam Chambers April 11, 2023 Splash247.com

NASDAQ-listed Euroseas is setting the pace in the remerging container charter scene, announcing details today of a three-year-plus charter of a newbuild feeder for a firm $48,000 a day.

The Greek owner has just taken delivery of the 2,800 teu Gregos from Hyundai Mipo Dockyard in South Korea and sent it out on a 36 to 40-month charter to Asyad Lines, an Omani carrier.

The Gregos is the first of nine newbuilds Euroseas has contracted.

Aristides Pittas-led Euroseas has been making headlines for its solid charter deals secured of late.

After being fixed and failed in late March, Euroseas’ 2009-built, 4,253 teu Synergy Keelung was fixed last week for a minimum 24-month period at $23,000 with Thailand’s Regional Container Lines (RCL), a rate brokers Braemar described as “remarkably firm” given the fact that last panamax fixture managed to achieve a 12-month period only and Euroseas was able to achieve a 5% rate increase for a period twice as long.

“Not surprisingly most owners have readjusted their period ideas accordingly – particularlay for vessels in the 3,000+ teu segment, and given the low supply, other operators are likely to align with the new longer period trend,” Braemar noted in its latest container weekly report.

Charter rates rising markedly for all sizes of ships is reflected in the Alphaliner Charter Index, which is now, for the first time since June 2022, on a modest but visible rising trend.

 Sam Chambers April 13, 2023 Splash247.com

Toronto-based Brookfield Infrastructure Partners is buying Triton International, the world’s largest owner of containers, for $4.7bn.

“We believe this transaction provides an excellent outcome for all of Triton’s stakeholders,” commented Brian Sondey, CEO of Triton.

The sale represents a total shareholder return of approximately 700% since the 2016 merger of Triton and TAL International, Sondey said.

“Triton is an attractive business with highly contracted and stable cash flows, strong margins and a track record of value creation,” said Sam Pollock, CEO of Brookfield Infrastructure. “This transaction provides Brookfield Infrastructure with a high going-in cash yield, strong downside protection, and a platform for growth in the transportation and logistics sector. The transaction consideration also provides the opportunity for Triton shareholders to benefit from owning a globally diversified portfolio of infrastructure assets within a platform that has a proven history of generating long-term value for its shareholders.”

 Sam Chambers March 16, 2023 Splash247.com

The lull in box volumes is resulting in falling congestion and also in changes in container flows as reflected in the Container xChange Container Availability Index. 

The index, which measures the proportion of weekly import to export flows at ports around the world, shows that the share of imports from the total volumes handled at the ports of Los Angeles and Long Beach, America’s two largest gateways, has fallen 10% compared to last year.

As of Sunday, the number of containerships in US coastal waters had fallen to less than half of the count a year earlier, according to Bloomberg.

At Ningbo, meanwhile, China’s second largest boxport, after two years of handling more exports than empty returns and imports, the share of imported containers crossed into and has remained the majority since late last year as demand for exports fell. 

The sight of empty containers stacking up at ports across China has been something covered regularly by Splash in recent months. There were more than 5m empty standard containers stacked at ports across China in early February, twice as many as pre-covid, according to data from Dalian Maritime University.

In a sign of just how drastically the market has fallen, recently listed box booking platform Freightos said earlier this week it expects revenue growth of 15% to 21%, down from a prior forecast of 87%.

“Global shippers must now navigate in a tricky environment, as carriers still rely largely on blank sailings when they should close services outright,” Peter Sand, chief analyst at freight rate platform Xeneta, told Splash.

”We see 2023 as a year of excessive capacity management by the carriers,” Sand said, going on to list the likely order of defensive measures the lines will issue from their playbook: blank sailings, hot followed by cold idling, and finally demolition. Xeneta expects 400,000 teu to permanently leave the fleet in 2023. Year-to-date about 30,000 teu has been sold for demo.

Drewry’s World Container Index, a spot index published every Thursday, was down another $16 today to $1,790 per feu, 82% down from all-time highs recorded in September 2021.

March 6, 2023 Martina Li Asia Correspondent

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Evergreen Marine Corporation has ordered 12,500 containers from Singamas Container Holdings for US$34.3 million, as the Taiwanese liner operator works towards expanding its business, despite the weak market conditions.

In January, Evergreen’s general manager Eric Hsieh unveiled plans to order 40,000 more containers – after having spent US$51.53 million on 9,800 new dry containers and 6,171 used boxes from Evergreen’s Singapore subsidiary in 2022. Last year, Evergreen also spent US$65.24 million to buy 7,800 reefers from Dong Fang International Container.

Evergreen also purchased its Singapore unit’s office for US$32 million to operate its own agency in the South-east Asian city-state, as the group expects delivery of 51 ships over the next two years.

Hsieh appeared to have been optimistic because of the pick-up in freight rates just before the Chinese New Year holiday, saying that Evergreen vessels on the Transpacific were fully loaded and lines attempted to impose a general rate increase (GRI) of US$1,000-$2,000 per FEU that month.

Hsieh had acknowledged there were long-running concerns about overcapacity. Alphaliner has forecast container shipping supply to grow by about 8% in 2023, with demand rising by just 2.7%. He said then, “We aren’t worried by the recent correction in container freight rates and we’re sticking to our expansion plans to boost our competitiveness.”

However, Hsieh thinks that stricter environmental regulations, such as the need for owners and operators to start meeting the requirements of the Carbon Intensity Indicator (CII), could remove about 10% of capacity from the market. The tonnage overhang therefore “may not be as serious as imagined”.