A recent report from HSBC Global Research predicts that after two years of unprecedented growth in container freight rates, the container shipping industry will inevitably suffer from overcapacity or a widening gap between supply and demand in 2023-24. If there is a downturn in the country, its profits will plummet by 80%.
HSBC predicts that global container trade will decrease by 2% in 2022, decrease by 3% in 2023, and then recover by 2.5% in 2024. By comparison, capacity will grow by 6.2% in 2022, 6.5% in 2023 and 8% in 2024. However, Parash Jain, head of shipping, ports and Asia transport research at HSBC, believes the industry will not return to the loss-making state that it often experienced in the past 20 years before the epidemic. . “There are signs that spot freight rates may quickly fall to pre-pandemic levels due to the widening gap between supply and demand (as shown by the BDI),But contract freight rates should be stable above pre-epidemic levels, and spot freight rates will not stay at low levels due to carrier capacity controls. ” said Parash Jain. Parash Jain said that container shipping company profits are expected to decline from the peak in 2022, but will still be better than in the past. AP Moller-Maersk, the largest listed container shipping company, expects EBITDA of $37 billion in 2022. The mismatch between container growth and new ship supply will drive freight rates down sharply from current levels. HSBC expects global container trade to fall by 2% in 2022, 3% in 2023, and recover by 2.5% in 2024. By comparison, ship capacity will grow by 6.2% in 2022, 6.5% in 2023 and 8% in 2024. HSBC said it expects the container shipping industry to bottom out in 2024, noting that its forecast for 2023-24 is well below consensus expected. HSBC (HSBC) continues to buy two container shipping stocks, Maersk and SITC, despite lower profit forecasts.
“By 2024 (the trough year of this down cycle), we believe Maersk will have returned just over 50% of market capitalization to shareholders and will be viewed as a less cyclical, non-marine business,” the report said. Accounting for 44% of its operating profit.”
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