From gCaptain, June 30:
Container shipping’s pandemic-fueled boom cycle has undoubtedly taken a turn in recent months, but lingering congestion is likely to prevent a swift return to normal, says Drewry in its latest Container Forecaster report published Thursday.
Falling demand has driven container spot freight rates lower on a weekly basis over the last four months and high inflation is eroding confidence that volumes will stage much of a comeback. “It certainly feels like we are at the beginning of the end of the container market bull run,” says Drewry.
Although carriers have proven that they can deploy strategies to uphold profits despite lower volumes, as evident from Q1 results, container shipping stocks have certainly taken a hit. Drewry’s report notes that while the container market has definitely turned, the winding down of high rates and carrier profits will likely take some time—with no significant loosening likely until the second half of 2023.
Carriers Still Hold the Ace Card
It comes as no surprise that container freight rates had reached unsustainable levels, but timing the market’s return to normal has remained uncertain amid ongoing issues in the supply chain.Drewry’s World Container Index shows rates declined 3% this week to $7,066 per 40-foot container—16% lower than a year ago and down significantly from the September 2021’s $10,377 peak, even though still about double the five-year average. Despite this dip, Drewry says ocean carriers are still holding the ace card....
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