Container shipping: the dynamics of the 2023 contract negotiations

The start of the container shipping industry's annual negotiating round is marked by different rate trends in different trades.

For shippers and shipping companies, October marks the start of the annual contract tendering process and preparations for next year's budget.

1/ The context

Several major trends look set to come into play in 2023.

• The likelihood of a return to pre-pandemic quality of service on the shipping companies looks slim. Shippers will, therefore, have to take an increasingly cautious approach to stocks, which will involve heavy storage, demurrage and detention costs.
  
  
• Maritime freight rates for goods leaving China and Asia in general are now engaged in a structural downward movement. This movement has come along with a fall in the volume of cargo to be transported, which should drop to 2018-2019 levels in 2023 on the major transoceanic lines after virtually two years of high growth.
  
  
• Shippers are making greater use of shorter services and making provision for them in their tenders as they seek alternative sourcing options. These nearshoring solutions are often more expensive and limited in scope but offer shorter and more closely controlled transit times.
  
  
• The increase in the value of the dollar and the corresponding depreciation of other currencies will have a major impact on purchasing decisions and the quantities of goods ordered in the dollar zone.
  
  
• The "3C" tryptic - Conflict, Climate and Covid - is hanging over decision-makers' heads like a sword of Damocles and, given the level of instability each of its components can cause, is making economic forecasting uncertain. Naturally enough, this leads to a lack of confidence and visibility, making demand more volatile and short-termist.
  
  
• Super slow steaming will continue and even be extended. Matson, which won appreciation for its decision to offer faster speeds in the transpacific trades via a premium service, has just announced that it is throwing in the towel because of the current low level of market demand, which it sees as likely to persist in the future. This last point brings us back to the first one: low speeds and out-of-sync services are a sure recipe for low resilience in logistics chains in 2023.
  
  
• Containers will be in increasingly short supply in the areas where they are needed and shipping companies' financial results will deteriorate, which will not encourage them to reposition empty containers in large numbers at their own expense.
  
  
• Industrial relations in the ports will deteriorate, as a result of the negative effect of inflation on purchasing power.