The unprecedented global demand surge stirred by COVID-19 in 2020 started to ebb in late 2022 and has been gradually normalizing throughout 2023. The term “normalizing” symbolizes constant overcapacity for liner shipping, much as it was in the distant past, with a few exceptions. Based on Alphaliner’s prediction, capacity supply will be up 9.1% in 2024, while demand may climb just a marginal 2.2%. The first big challenge for the entire container shipping industry is how to fill up the huge gap.
With growing numbers of newbuildings on the order books and the Shanghai Containerized Freight Index having fallen to three digits, it will be harder for liner shipping in the years ahead. Decarbonization calls for CII implementation and the abolition of the European Commissions’ CBER will undoubtedly add challenges the industry will have to react to swiftly and properly.
In day-to-day business, shippers will require reliable transport service to deliver cargo while transport providers will anticipate a reasonable return to sustain operation or reinvest on service improvements. Each transport provider will need to find where the equilibrium between shippers’ demand and service deployment is by changing the strategy from “supply push” to “demand pull” so that capacity stress can be eased. As a result, both shippers and transport providers will benefit.
Looking forward to 2024, CEOs may frown at operational risks incited by geopolitical conflicts and rising costs. The liner shipping industry ought to consider how to introduce new technologies for vessels, including green fuels and inventions that help in reducing ship navigation resistance — e.g., wind deflector and propeller boss cap fins — to address foreseeable challenges through sustainable pursuits.