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No Uptick in Container Line Volumes in Q4 Expected

No Uptick in Container Line Volumes in Q4 Expected

Coming off a high in the last two years, container lines are expressing concerns about the deteriorating trading outlook for the second half of the year as tighter monetary policies dampen consumer demand.

IN a recent report from the Loadstar it was expressed that “a subdued peak season, followed by a lengthy slack period, prompting further rate erosion, will wreak havoc on the balance sheets of carriers heavily exposed to east-west trades”.

“They will need every last dollar of the legacy profits achieved in the first quarter to avoid finishing the full year in the red”

Container lines are already said to be racking up loss-making voyages on the transpacific, while Asia-Europe results are only being kept in the black by a robust Mediterranean market.

Another dark cloud in the horizon is the delivery of a number of 24,000 TEU ultra-large vessels in the coming months, which can only be deployed on Asia-North Europe alliance loops, which could start a downward spiral of rates on the tradelane, unless demand picks up significantly.

As it stands, the timing could not be worse for the introduction of new mega-ships and, moreover, the cascading of the incumbent vessels to other trades will put more downward pressure on rates on those routes.

In its June Asia Pacific market update, Maersk acknowledges that growth in H2 is “expected to be much slower than we saw over the previous six months”.

“While the first half of 2023 showed the overall global economy to be more resilient than expected, sticky inflation and residual effects of previous monetary policy leave analysts worried about the second half of the year,” the Dutch shipping giant said.

Reduced demand for imports into the US from Asia, and a consequential slump in freight rates, has prompted niche carriers on the transpacific, including China United Lines and Pasha Group, to shutter their services and we expect to see increases in blank sailings and other measures in the coming months.

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