Is it a price war - or is it competition?
According to a market forecast made by Container X Change, an online platform for container logistics, “the probability of an all-out price war in 2023 is high," as CEO Christian Roeloffs put it. After the times of scarce capacities and exceptionally high container rates, prices will collapse further in 2023.
A significant oversupply of containers will set in, shipping companies will reduce their ship capacities and schedule empty runs, according to Roeloffs. “We expect prices to fall to near variable costs. We also expect market consolidation,” he added.
Looking at the situation from a more macro perspective, it seems that what container shipping has experienced over the past three years is a natural reaction of market forces of supply and demand, resulting from disruptions such as the outbreak of Covid-19 and the subsequent lockdowns, the war in Ukraine, geopolitical risks and much more.
Container prices skyrocketed when there weren’t enough containers to meet increasing demand. Retailers and importers started to increase their stocks in advance, to avoid container congestion. Now that stocks have been replenished, demand is falling dramatically. Inflation and the energy crisis are leading to restrained spending, which will also affect the container industry. (sh)