HSBC reports: Container transport to hit bottom in mid-2023

The sharp decline in container shipping’s fortunes at the start of September was flagged by Parash Jain, Head of Shipping & Ports & Asia Transport Research. He predicted that shipping line profits would drop by 80% in 2023-24. The spot rates have stumbled down far swifter than anyone expected.

Research by HSBC titled “Fast and Furious” pointed out that Shanghai Containerized Freight Index (SCFI) has noted a 51% drop in the spot rates since July end which is a decline of 7.5% per week. It was also brought to notice that the spot rates were well below the contract rates set at the start of 2022, particularly on the transpacific trade.
HSBC has carried forward its anticipated trough of freight rates to mid-2023 from 2024 with a lesser demand forecast and a higher-than-estimated effective volume increase due to the unwinding of crowding. Sector profitability is set to hit a low in the second half of 2023.

The analysts predict Q3 2022 earnings to remain robust, but profit guidance statements may indicate whether liners have been able to guard contract rates in re-negotiations.

The research note specifically said that the recurrence of capacity after the Golden Week period vs. extended blanked sailings will determine whether freight rates stabilize any time soon. HSBC has cut profit estimates for scheduled container lines for 2022 – 24 by up to 51%.