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Xeneta projects that demand will grow 2.5% in 2024 in the ocean freight market at a time when supply is expected to grow 6.5%. Spot rates will remain volatile, according to the Oslo-based freight rate benchmarking and market analytic platform operator, while long-term rates will become steadier than in 2023. Spot rates are envisaged to hover just below or above long-term rates.
Xeneta has listed six factors to pay attention to in 2024 market developments, which are 1) consumer spending, 2) capacity growth, 3) traditional seasonality, 4) labor-management negotiations in the U.S. East and Gulf coasts, 5) the termination of the 2M Alliance and 6) cargo emission regulations.
As for 1), growth in the global GDP is anticipated to decelerate to 3% in 2023 and 2024. As such, container demand is envisaged to increase just 2-3% on a TEU basis.
In respect to 2), shipping capacity, which is growing at a record level this year, is estimated to remain as robust in 2024. Ship demolitions are also foreseen to rise in terms of capacity, although they are not expected to reach the total of 657,000 TEUs in 2016. Xeneta sees that shipping companies will try to maintain balances on trunk trade lanes by implementing slow steaming, deploying more ships, cascading large ships and so on. At the same time, they could give up profitability from less busy routes.
Regarding 4), the labor contract between the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMA) expired on Sept. 30. If labor disputes are ignited, according to Xeneta, they would have a negative impact on cargo movement and handling from the beginning of 2024. If this is the case, spot rates for West Coast-bound shipments would rise and lessen gaps from those for East Coast-bound shipments. Xeneta has pointed out that shippers will need to not only watch rate fluctuations but also keep an eye on transit time, schedule reliability and predictability.
As it concerns 5), the demise of the 2M Alliance in January 2024 and the discontinuation of the Consortia Block Exemption Regulation (CBER) in April 2024 are foreseen to raise uncertainties.
Concerning 6), Xeneta has stressed that the number of shipping companies and shippers preferring inland transport to feeder shipping in and around the EU could increase.
