Charting the Course: Global Container Market Projections
In today's volatile supply chain market, understanding the current trends of supply and demand is crucial. In this blog, we'll look at how industry shifts are impacting logistics, shipping rates and what this means for your business.
Global Container Market Projections
The name of this game: global container shipping demand is down, so rates will tend to stay down. In the throes of trying to maintain profitability, the steamship lines (abbreviated SSL – the companies like Maersk that carry the containers) will work within their alliances to enact policies that will keep rates as high as the market will allow. However, they are still subject to market conditions, which are currently in an oversupplied capacity with more capacity to be delivered in the next 12 months. Without a significant bump in demand for goods, it will be difficult to justify ongoing rate increases.
Part of what will drive the behaviors in the coming year is the fact that container carriers (SSLs) have alliances that allow them to do some collaborative price-setting. It’s likely we will see General Rate Increases (GRIs) in certain trade lanes (Asia to the US, for example), all happening at the same time between multiple carriers. However, these GRIs will not likely stick for long in an over-supplied scenario.
Related Article: US Truck Market Projections For 2024
Container Shipping Trends
In the brief podcast linked below, supply chain analysts at Drewry speak to how the global container market, in general, is oversupplied, but it won’t stop SSLs from trying to keep rates up. Despite those efforts, they are still projecting a 20-25% decrease in freight rates in 2024. There will be microcosms of freight increases when dynamics change. Still, there aren’t any global trends in consumer demand or confidence that suggest a market-wide ability to raise rates over time.
Anticipate these trends in global container shipping in 2024:
- Focus on cost-cutting by the SSLs could result in more canceled sailings, skipped port calls, and slow-steaming, which will all ultimately lead to increased lead times for goods coming into the US.
- Rolling General Rate Increases will be attempted but generally they don’t last long when the overarching market dynamics suggest over-capacity. Even if carriers give a GRI, it’s worth keeping close with them in the weeks that follow to see if they will bring rates back down to win business.
- Carriers will keep vessels idle to keep capacity somewhat constrained and prevent further rate drops.
- East-West tradelanes (US⬄Asia, Europe ⬄Asia) will likely see a drop in rates throughout 2024 – potentially up to 20%. Apart from unforeseeable shocks from weather or geopolitical events, there aren’t many dynamics anticipated in 2024 that could push rates up.
- Service levels will become more of a concern as schedule adherence drops and bookings are rolled due to skipped port calls, etc.
For more data and information, we recommend checking out the following resources:
Looking for expert advice on optimizing your supply chain strategies to align with current trends? Waypost Advisors has leading supply chain consultants ready to help your organization. Contact us today and we’ll schedule your 30-minute complimentary call with an Advisor with experience in your specific industry.
Waypost Advisors is an end-to-end supply chain and resourcing solution. We offer expertise in procurement, inventory, project management, planning, transportation & warehousing to fit the needs of your B2B manufacturing or distribution company. Our advisors can provide you with the resources and expertise to tackle your supply chain challenges while allowing you to still focus on running your business.