We recently hosted a fireside chat hosted by Patrik Berglund, CEO and Michael Braun, VP of Customer Success at Xeneta, with special guest Lars Jensen, CEO at Vespucci Maritime and CCO at LinerGrid. The webinar aimed to address and debunk six key media headlines circulating in the ocean freight sector, using data sets from Xeneta's benchmarking and analytics platform. Check out the summary of the key takeaways below.
Price war? Capacity injection? Oh my.
Regarding the existence of a price war, Lars Jensen acknowledged a previous price war around the turn of the year but stated that it is not currently ongoing. He explained that spot rates dipped below pre-pandemic levels, particularly in the transpacific and Asia-to-Europe trades, due to decreased demand and insufficient capacity. However, the situation improved as carriers adjusted capacity and demand rebounded in certain regions. Profitability for carriers in Q1 was reported to be good, but lower rates may impact profits in the coming quarters, especially considering the additional costs incurred due to supply chain bottlenecks.
The discussion then turned to the injection of capacity in 2023/24. Lars Jensen clarified that while newbuild deliveries will increase, it should not result in a catastrophic oversupply. Factors such as scrapping, slow steaming, and the need for more vessels due to larger ship sizes will help absorb the additional capacity.
The webinar also addressed the impact of nearshoring on global demand. Lars Jensen explained that nearshoring, such as the "China plus one" trend, does not involve massive production shifts out of China. Instead, companies may establish additional manufacturing units outside China if they already have operations there. Nearshoring is expected to happen gradually, with Southeast Asia and the Indian subcontinent being favored due to labor force availability. While there may be a dispersal of sourcing patterns, it is unlikely to change global demand or reduce TEU amounts significantly.
Market and alliances crash 2023?
The possibility of a market crash in the second half of 2023 was discussed, and the audience strongly disagreed, with 82% indicating that they did not anticipate a crash. Although demand declined in the US and inventories stagnated, Lars Jensen argued that a crash is unlikely. He highlighted the potential for a normal peak season driven by retailers replenishing inventory for upcoming holiday seasons.
Regarding the alliances in the industry, Lars Jensen emphasized that carriers may focus on logistics rather than engaging in a classical price war. While alliances may undergo reshaping, Lars suggested that the Ocean Alliance could be the next to break up, potentially impacting THE Alliance.
Overall, the experts discussed various aspects of the ocean freight market, addressing price wars, capacity injections, nearshoring trends, market crashes, alliance dynamics, and shippers' engagement strategies. The key takeaway? Careful planning and risk management is needed in an industry prone to volatility and disruption.
Are you eager to uncover the truth behind the headlines?
If you're hungry for knowledge and want to stay ahead of the game, download the webinar recap now and discover the hidden truths of the ocean freight market. Get the full excerpt of the webinar where these industry experts debate and debunk prevailing narratives. With special guest Lars Jensen, CEO and Partner at Vespucci Maritime and LinerGrid, this webinar brings you data-backed analysis and expert opinions. Don't miss out on this opportunity to level up your understanding. Access the recap and unlock valuable insights today.