Pacific small carrier share normalized : Sea-Intelligence

COPENHAGEN:Justbeforethestartofthepandemic,the non-alliance carriers were offering 16,000 TEU per week on average on the Asia-North America West Coast trade lane, droppingto10,000TEUperweekattheonsetofthepandemic, followed by a sharp upward swing to 40-50,000 TEU per week, as the non-alliance carriers poured capacity into the trade lane.

In terms of market share of total weekly deployed capacity on the trade lane, the non-alliance carriers increased from a pre-pandemic figure of 10% to around 15% during the peak. As freight rates began to normalise and capacity gradually became available again in the market during 2022, the nonalliance market share also began to decline. In essence, for most of 2023, their share has reverted back to the 10% levels. Thisisshowninfigure1.Thedatashowninfigure1isbasedon a3-weekrollingaverage,toeliminatetheworstofthevolatility and to better ascertain the underlying trends. If this was not done, the non-alliance would have, in some weeks, offered morethan20%ofthecapacityinthemarket.

Basedonthetotalityoftheperiodi.e.,fromJanuary2020to July 2023, there is a clear difference in scale between the carriers, with Wan Hai, Matson, and SM Line substantially larger than the other non-alliance carriers operating on the trade. If we however look at the development over time, the pattern becomes a bit more complex.

For example, WanHaireactsvery sharply to the initial pandemic shock, followed by an equally sharp reaction once the market tightensandfreightratesgoup.SMLineshowelementsofthe same behaviour although not to the same degree as Wan Hai. Coming into 2023, SM Line is consistently offering more capacityinthetradethanWanHai.

All that said, the plethora of new carriers, who entered the market at the peak of the freight rate bonanza, are mostly equally quick to exit the market, as conditions have been normalisingin2023.

BIMCO: Container Shipping Market to grow by up to 1.5% in 2023

OSLO: In our base case scenario, BIMCO predicts that global container volumes will grow by between 0.5% and 1.5% in 2023, and by between 5.5% and 6.5% in 2024. They will thus reachapproximately185millionTEUin2024.

Volumes in the first half of 2023 will show negative growth as head-haul and regional trade lanes have not yet recovered from the slowdown that began in the second half of 2022. We predict that the recovery in volumes and growth rates will beginduringthesecondhalfof2023.

We expect that combined volumes for the all-important head-haul and regional trade lanes will end 2024 approximately 7% higher than in 2022. Back-haul trade lanes have experienced negative growth for three consecutive years, but we believe that growth will return in 2023 and 2024 and that volumes in 2024 will end approximately 5.5% higher than in 2022. However, much uncertainty about the timing of the market recovery still exists, so we have also developed a lowcasescenario.Inthisscenario,weassumethatthemarket downturn will last throughout 2023 and that recovery will only beginin2024.

In this low case scenario, global container volumes will end 2024 about 3.5% lower than in the base case scenario. Volumes in head-haul and regional trade lanes will end 2024 nearly5%lowerthaninthebasecasescenario.

Economic growth remains a key driver of demand in the container market. The International Monetary Fund (IMF) predicts global economic growth of only 2.8% in 2023 and 3.0% in2024.

However, risks remain firmly tilted towards the downside, with the IMF also presenting a low case scenario where tighter financial conditions could reduce growth to 2.5% and 2.8% in 2023 and 2024 respectively. The advanced economies are likely to suffer a greater negative impact and specifically the US, the European Union and Japan are predicted to see growth 0.4 percentage points lower in 2023 than in the base case.EconomieswithclosetiestotheUSsuchastheMexican and the Canadian are at greater risk of suffering a slowdown thaneconomieswithloosertiestotheUS.

The weaker than normal conditions are also apparent within the manufacturing sector. The global manufacturing PMI (purchasing managers’ index) has only hit 50.0 once since September 2022 but has otherwise been lower, indicating falling activity. The situation has been similar in China and although a manufacturing PMI reading of 51.6 in February2023offeredsomehopesofrecovery,itslippedbelow 50againinApril.

Consumers on the other hand appear to be faring better. Unemployment rates in both the US and the European Union arelowincomparisontopre-COVID-19levels.

Retail sales volumes in both the EU and the US have stayed mostly stable, and the most recent sales figures are only 5% and 3% lower than the peak sales levels seen in 2021 respectively. However, the trend has been a slow but steady decline and consumer sentiment in both areas also remains verylow.

Despite North America import volumes falling 21% y/y in Q1 2023, the inventory/sales ratio for all business sectors has been climbing back towards pre-COVID-19 levels, indicating that inventories have grown faster than sales. In many countries, high inflation, rising interest rates and tightening financial conditions remain a challenge for both consumers and businesses. In the US in particular, there is a concern that the Federal Reserve will increase interest rates so much that the economy will suffer a “hard landing”. Should that occur, it willalsonegativelyimpactothercountriesandregions.

It is therefore too soon to conclude that import volumes into North America will recover in the second half of the year, though that remains our base case assumption. The same applies to European imports. So far, Q1 2023 volumes fell so much year-on-year that total volumes were lower than in Q1 2019 and head-haul and regional volumes were only marginallyhigher.

Still, volumes into South & West Asia, Latin America and Africa are cause for some optimism as combined, they were 6.9% higher in Q1 2023 than in Q1 2019 and grew 4.3% compared to Q1 2022. Unfortunately, the three regions’ volumesonlymakeup23%ofoverallvolumes.

Renewed growth in the three main regions –East & Southeast Asia, Europe & Mediterranean and North America –thereforeremainscriticalforvolumesreturningtogrowthin thesecondhalfoftheyear.

To

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FOR UK, NORTH CONT, SCAN, BLACK SEA, EAST

TO LOAD FOR MED / RED SEA & WEST ASIA GULF PORTS

FOR KARACHI, COLOMBO, YANGOON AND BANGLADESH

USA,

TO LOAD FOR FAR EAST / EAST, WEST & SOUTH AFRICA / AUSTRALIA & NEW ZEALAND PORTS

Durban, Dar Es Salaam/Maputo/Mombasa-T/S at Durban

23/0624/06 Torino (Malta) 30 Eukor Car Carr Parekh Marine Singapore.

30/0601/07 Alliance Norfolk 130 Hoegh Autoliners Merchant Shpg. Durban, Dakar, Dar Es Salaam/Maputo/Mombasa-T/S at Durban Abidjan, Lagos, Luanda & other Ports in West Africa-T/S at Dakar

m.v. “EVER USEFUL” V- 169E

The above vessel is arriving at NHAVA SHEVA (NSICT) on 05-06-2023 with import cargoes from ports KAOHSIUNG, PORT KLANG WESTPORT, QINGDAO, XINGANG.

Consignees are requested to present Original Bills of Lading duly discharged and obtain Delivery Order on payment of all charges as applicable. Detention charges where applicable will be charged as per tariff.

Our Surveyors are M/s. Pinnacle Marine Surveyors Pvt Ltd. Usual Survey conditions shall apply.

Consignees are also requested to note that the carriers and/or their Agents are not bound to send individual notifications regarding arrival of the vessel or the goods.

Note : For IGM & ITEM nos. Vessel arrival inquiry, destination charges tariff please visit our site : www.ekmtc.com For KOREA MARINE TRANSPORT CO. LTD. As Agents :