Container Shipping Market Facing Major Challenge

The CEO of Maersk Line, the world’s largest ocean container shipping company, expressed deep concern for the future of the global container shipping industry. Speaking at the company's annual shareholder's meeting, Vincent Clerq explained how the abundance of companies providing the same service has caused customer rates to fall to unsustainable levels from their post-pandemic peak.

“Freight rates have fallen significantly since the good years of 2021 and 2022, and have fallen actually to an unsustainable level,” Clerc said.

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Maersk highlighted the 9% increase in global capacity due to the influx of new container ships last year. This capacity is expected to further escalate by 11% this year and an additional 7% in 2025. 

The container rates experienced a surge in December and early January due to vessel attacks in the Red Sea, diverting ships from the Suez Canal to longer routes around Africa. However, this temporary spike faded as the available capacity continued to outstrip demand.

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Clerq emphasized the necessity for measures such as demand growth, slow-steaming, and ship recycling to balance out the overcapacity and restore healthy earnings levels over time. In response to these challenges, Maersk reiterated its commitment to cost control measures, having previously announced a reduction of 10,000 jobs last year. 

Similarly, German competitor Hapag-Lloyd acknowledged the global oversupply of container ships and the crisis in the Red Sea, signaling plans to implement cost-cutting measures in 2024. This decision comes after an 83% decline in net profit, prompting adjustments in sailings and other operations. Earlier this year, Maersk and Hapag-Lloyd announced a partnership to create a new ocean network called the Gemini Cooperation.