After over two years of record-high freight rates and historic disruption, 2023 has began with most industry stakeholders expecting a mixed bag for the various shipping segments.
Fitch Ratings has revised its outlook for shipping to deteriorating from neutral, reflecting the challenges facing Container Shipping. The rating agency forecast that Tankers and Dry Bulk will remain stable, with the former the most likely to perform well. The easing of supply chain pressures has led to the near normalisation of container freight rates, which suggests that profits in 2023 will be much weaker than they were over the last three years, when they were supersized.
The main risks include the potential for a harsher recession than expected and the continuation of Covid-related lockdowns in China that could lead to further weakness in demand and manufacturing. Though not likely, any port capacity limitations in China in excess of lockdown-related production limitations could be positive for container freight rates, Fitch said.
Xeneta sees the rapidly cooling ocean freight market set for an “extremely challenging” 2023. The leading ocean and air freight rate benchmarking and market analytics platform, says shippers will see their volumes reduced and will have less leverage to negotiate with carriers. However, this will overlap with carriers becoming desperate for any volume. In addition to the above, geopolitical turmoil might push us into an extended period of low economic growth.
U.N. agency UNCTAD also warned that the pace of global shipping activity is set to lose steam in 2023 as economic turmoil, the conflict in Ukraine and the impact of the Covid weaken the outlook for trade.
In its Review of Maritime Transport for 2022, the United Nations Conference on Trade and Development (UNCTAD) projected global maritime trade growth would moderate to 1.4% in 2023. This compares with estimated growth of 3.2% in 2021 and overall shipment volume of 11 billion tonnes, versus a 3.8% decline in 2020.
“The recovery in maritime transport and logistics is now at risk from the war in Ukraine, the continued grip of the pandemic, lingering supply-chain constraints, and China’s cooling economy and zero-COVID policy, along with inflationary pressures and the cost-of-living squeeze,” UNCTAD said in the report in November 2022.
Trade credit insurer Allianz Trade expects global trade in goods and services to grow by only +0.7% in volume terms in 2023 and to contract by -1.3% in value terms (to $29.5 trillion).
And Lloyd’s List’s Outlook Poll confirmed the industry view that business prospects will be hit by a global recession throughout 2023.