NAVIGATING 2023
Sea freight rates on certain trade lanes could fall to pre pandemic levels while on other trade lanes sea freight rates continue to fall off historical highs.
European hubs and main gateway terminals continue to stabilise with limited to no vessel berth waiting times.
While reliability and performance has improved in European ports, the winter months typically bring a new set of challenges with the expectation of colder weather in northern Europe due to northerly/easterly winds, with potential periods of fog.
The transatlantic trade lane is often impacted by turbulent weather as well during the winter period. The expectation is that there will be disruption due to the winter weather. As such, logistics planning aimed to build stability, enhance reliability, and navigate challenges will be critical as we move into 2023.
Our team will continue to review and evaluate these challenges heading into the new year adjusting where necessary and ultimately ensuring minimal supply chain disruption.
The continuing decline of cargo from trade lanes such as China due to falling demand is expected to see overcapacity hit the sea freight market in 2023. Carriers will look to phase in new vessels ordered during the pandemic. Sea freight spot rates could reach pre pandemic levels sooner than expected on major East-West trade lanes. Given the high volatile market conditions combined with a poor peak season, ocean carriers with relatively smaller vessel fleets are finding it challenging to curb losses and maintain normal vessel operations. If sea freight rates continue to decline, there is a strong possibility that the newer ocean carriers operating megamax vessels will exit the market on major East-West trade lanes.
Market conditions will not only create challenges for ocean carriers in 2023 but also for shippers and beneficial cargo owners (BCO’s) as they look at contract negotiations in an environment where it will be more challenging to plan for declining cargo demand.
Global disruptors such as the COVID-19 pandemic, the six days blockage of the Suez Canal, and most recently the war in Ukraine, have disrupted supply chains around the globe. These events have highlighted the world’s dependency on the ability to move goods and cargo securely and effectively across borders – proving customs procedures to be more crucial than ever before.
IMO 2020 was significant because of the scope of change for international sea freight moving to low sulphur alternatives for fuel. Numerous ocean carriers used scrubbers to achieve same outcome.
IMO 2023 is designed to encourage the improvement of vessel efficiency, adoption of low-carbon alternative fuels, and lower emissions in international sea freight.
It will create challenges and opportunities for the vessel owner/operators seeking compliance and beneficial cargo owners seeking opportunities to lower the energy cost and emissions needed to get their goods to customers. The end goal is to reduce carbon intensity of all vessels by 40% by 2030, compared to 2008 levels.
The IMO is yet to set a net-zero emissions target, but various ocean carriers are setting their own targets.
Already the first orders for carbon-neutral container vessels running on “green” methanol have been made.
Importers and exporters are driving this initiative for ocean carriers and shipowners to action and invest in carbon-neutral vessels.
These changes potentially create a competitive advantage to those shipping lines leading the way to reduce their global shipping emissions. There is an expectation that beneficial cargo owners will seek out these shipping lines to reinforce their own corporate goals and emission targets.
While the IMO 2023 regulations will have the biggest impact on vessel owners, beneficial cargo owners or shippers, may see the costs reflected in higher rates or surcharges.