As most people anticipated, container shipping rates “normalized” in 2023, having fallen back to pre-pandemic levels on all major trade routes. However, unlike 2019, the carrier operating costs are now almost 30% higher. Furthermore, carriers are facing a surge of new vessel capacity that is being injected into a market that is already in excess supply, which in turn results in more blanked sailings and global service reliability of an estimated 65%, compared to about 80% back in 2019. So, I don’t think the container shipping market has really “normalized.”
As we look into 2024 it will probably be anything but “normal,” with even more variables that could prove extremely disruptive. For instance, carriers now need to re-evaluate their alliances due to the EU’s anti-trust exception for alliances expiring in April. Carriers are also grappling with high stakes investment decisions for new vessel types and green fuels, as well as how to pass through new environmental taxes. On that note, environmental factors are becoming more prominent, for example with drought restricting the Panama Canal. Finally with the geopolitical tensions surrounding Ukraine, Israel and even Taiwan, there are unfortunately many highly disruptive scenarios that could play out.
As shippers, carriers and NVOs prepare for 2024, it is more important than ever to plan for unpredictability. At NYSHEX, we remain focused on providing technology to support all our members’ freight contracting needs, as well as providing enhanced data and workflows to manage things when they don’t go as expected.