THE GLOBAL SHIPPING INDUSTRY HAS SUDDENLY COME TO WINTER!

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  • Time of issue:2023-11-28 09:36
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(Summary description)Analysts are collectively pessimistic this year, predicting that the global shipping industry will slip back into deficit this year for the foreseeable future.

THE GLOBAL SHIPPING INDUSTRY HAS SUDDENLY COME TO WINTER!

(Summary description)Analysts are collectively pessimistic this year, predicting that the global shipping industry will slip back into deficit this year for the foreseeable future.

  • Categories:News
  • Author:
  • Origin:
  • Time of issue:2023-11-28 09:36
  • Views:
Information

 

Analysts are collectively pessimistic this year, predicting that the global shipping industry will slip back into deficit this year for the foreseeable future.

 

Rolf Habben Jansen, CEO of Hapag-LIoyd shipping, said he is concerned about the shipping market for the next 24-36 months, which he believes will see an impact from the economic downturn.

 

AP Moller-Maersk A/S, the world's largest listed container shipping company, is seen as a typical example. Its free cash flow hit $27 billion last year, but the industry believes that figure will plunge 80% this year and fall below positive by 2024.

 

Gloomy outlook

 

The world's top five companies have said they plan to cut costs amid fears the recession will hit the shipping industry and last until at least 2024. Together, the five companies control about a third of the world's container capacity.

 

This is the complete opposite of last year's fire and oil scene. The historical profit highs of the past two years have been linked to the COVID-19 pandemic, and supply chain bottlenecks and high demand have led to ultra-high freight rates, allowing many freight companies to record new highs.

 

But this year has been grim. On the one hand, global demand for commodities is returning to pre-pandemic levels, and freight rates are falling in a highly competitive environment. On the other hand, newer, larger ships are starting to enter circulation, and these ships typically have a service life of around 25 years, which means that there may be a surplus in the existing capacity market.

 

To manage short-term capacity, carriers have begun to consider cancelling individual trips or suspending operations entirely on routes where demand is weak. In the longer term, they can also cut capacity by terminating charters, idling ships or selling them on the scrap market.

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