Insight: What's in Store for Container Shipping in 2023?

Container shipping is still feeling the aftereffects of the turbulence let loose in recent years, yet what does 2023 and beyond hold for the container shipping trade? The answer to that gives us vital insights into the future of the global economy, the roadmap for logistics, and the present market for supply chain executives.

Let's start with a broad outlook for the short-term future.

BIMCO, one of the largest of the international shipping associations that represents approximately 60% of the world's merchant shipping tonnage, predicts that global container volumes will grow by between 0.5% and 1.5% in 2023.

While this modest growth may seem rather unnoteworthy, it is part of a growing trend that will see volumes rise between 5.5% and 6.5% in 2024.

This auspicious outlook is reaffirmed by online logistics platform Container xChange.  

The container price sentiment index (xCPSI) is a sentiment analysis tool used by Container xChange that continued to show negative readings until mid-March, 2023.

However, since then, results have consistently turned positive, reaching an all-time high at the beginning of April, when the index started showing confidence building for the coming quarter (see below).  

Medium-Term Outlook

After the turbulent and unpredictable period over the pandemic era when the container market saw a boom, we've witnessed the aforementioned low growth.

However, analysis firm S&P Global has stated that it expects supply normalization "...with about 2% fleet growth annually in the next few years [that] will help the dry bulk market to recover, while a large amount of scheduled newbuilding deliveries of container vessel capacity with reduced port congestion would put the container freight rates under further pressure."

Henceforth, the container trade is expected to face supply-side pressure with heavy investment in new buildings.

Newbuilding contracts in 2021 reached the highest since 2015 mainly owing to container vessels and will keep major shipyards occupied until at least 2024 (some into 2025).

How are the Big Names Faring?

Danish shipping giant Maersk Line is striking a cautionary note, recently stating: "We have revised our global GDP growth forecast for 2023 from 1.5% to 1.8%.

"However, it is essential to note that only the timing has changed. The overall economic outlook for 2023 remains weak, with a low projected growth."

The world's biggest container shipping liner Mediterranean Shipping Company (MSC), is striking a brighter tone, expecting positive signals for the global economy from trade demand, but maintaining that it will be months before a real rebound takes hold.

MSC CEO Soren Toft recently said: “I would say we are moderately optimistic that the world will resume again [to optimal trade levels].

"I think when we come to the middle of this year [2023], we’ll probably start seeing trade move. I would suspect when we get through the second quarter and into the middle of the year, we’ll start to see some positive signs.”

Outlook for the Middle East

UAE-based digital freight forwarding service provider Qafila has offered several insights into key trade lanes interconnecting with the Middle East and beyond.

Capacity between the Middle East and Europe is expected to remain flat; whereas the rates will decrease slightly.

With regards to Asia, there is volume surge due to early Eid holidays this year, and considering the Pre-Lunar New Year’s blank sailings, the GRIs are strong for all the Gulf and Red Sea markets.

In the case of North America, capacity is opening up for services in the MENA area, while the rates are softening.

Given the huge investments made in the Middle Eastern logistics market, and a push for more talent, tourism and development in the region, the outlook is more than stable for the medium-to-long-term future of the arena.

Read more: Maersk Discusses ‘Logistics 4.0: Accelerating Africa’s Digital Revolution’