Status: 12/13/2022 12:46 p.m
According to Germany’s largest shipping company, Hapag-Lloyd, container shipping is heading into much calmer waters after years of turbulence. The traffic jams have now cleared up at most ports.
The situation in global container shipping, which has gotten out of step due to the corona pandemic, is increasingly normalizing. However, the industry has to contend with significantly increased costs. Even if there are still backlogs in some parts of the world: The supply chains are recovering and more and more container capacities are becoming free, said the head of the Hamburg shipping company Hapag-Lloyd, Rolf Habben Jansen, in a conference call. Especially on the east-west routes, demand is falling due to inflation and increasing uncertainties.
Drop in spot rates faster than expected
As a result of the shrinking demand for transport, spot rates, i.e. the price for booking containers at short notice, have also fallen recently. They moved back towards pre-corona levels. The head of the world’s fifth largest shipping company referred to the Shanghai Containerized Freight Index (SCFI). This shows the development of freight rates for container transports that depart from Shanghai, the world’s largest container port.
According to this, the transport of a container in the third quarter cost an average of 3279 dollars (3110 euros) – after 4698 dollars (4455 euros) at the beginning of the year. At the beginning of the pandemic in early 2020, rates were still under $1,000. Habben Jansen said the decline was even a little faster than assumed some time ago. But if you take into account the level at which freight prices are coming and the market is normalizing, it is not illogical that this is happening relatively quickly.
At the same time, the shipping companies’ costs have risen enormously – for fuel, for example. According to Hapag-Lloyd, bunker costs rose by 71 percent in the first nine months of this year. With a view to the ships recently ordered, Habben Jansen assumes that, together with the normalization of container traffic, there will be an oversupply of transport capacities in the coming year. How big this could be, he left open because of the great uncertainties.
Signs of a slight recovery in demand
In general, the Hapag-Lloyd boss was cautious about 2023 and 2024 in view of the global economic slowdown: “I’m not that worried – also because some people have seen it a bit too negatively in the last two months.” There are signs of a slight recovery in demand. Bookings were slightly stronger in December than in September and October. “I don’t think the market is as weak today as it was four or eight weeks ago.”
According to Hapag-Lloyd, the competition between the shipping companies has become tougher. On some routes, the rates do not cover costs. “That wouldn’t happen if the competition wasn’t fierce,” said Habben Jansen. However, the past ten years have shown that freight rates eventually settled at a level that at least covers costs.
The number five among the global container lines is one of the big winners from the massive upheavals in global supply chains during the corona pandemic. In the first nine months of this year alone, the group profit doubled to almost 13.8 billion euros thanks to the high freight rates. That is again significantly more than the 9.1 billion euros that the company posted as net profit in the entire exceptional year 2021. Hapag-Lloyd intends to present the figures for the full year 2022 at the beginning of March 2023.