top of page

The dry bulk shipping market may experience a downturn in 2023 that will last until 2024

Last year's shipping performance was booming, mainly due to the conflict between Russia and Ukraine and the subsequent reshaping of global maritime energy transportation. But the shipping market is not as glamorous as it appears on the surface. Shipping companies have been plagued by problems like port congestion, lack of skilled workers, and soaring inventories have reduced warehouse space, terminal rules for loading and unloading containers, late container fees, and canceled flights.

Zhang Haijun, a veteran in the industry who has worked in many well-known shipping companies such as OOCL and COSCO, exchanged views on relevant issues.

Why do you think the dry bulk shipping market will remain depressed this year?

In the fourth quarter of 2022, the prosperity index of dry bulk shipping companies was 83.39 points, a drop of 8.86 points from the previous quarter, falling into a relatively depressed range; the confidence index of dry bulk shipping companies was 51.07 points, a decline of 8.93 points from the previous quarter, maintaining less favorable range.

Dry bulk shipping companies remain poor, and entrepreneurs lack confidence in market operations. Judging from various operating indicators, the capacity of dry bulk shipping companies has continued to decrease, the turnover rate of ships has dropped sharply, operational costs are still high, and freight revenue has fallen sharply, causing corporate profitability indicators to fall into a relatively depressed range.

Although corporate loan liabilities have been reduced, liquidity is abundant, and corporate financing is relatively easy, the demand for labor has declined, and corporate willingness to invest in transportation capacity has continued to decline.

The share of Chinese and Russian energy exports has been rising recently, while weaker global demand and easing supply chain congestion have lowered commodity prices. Despite the negative market expectations, the dry bulk shipping spot market in 2023 will still not be lower than the current FFA contract market.

Will pessimism be the main tone of shipping companies in 2023?

Not necessarily, judging from market expectations, tanker shipping companies, especially those transporting refined oil (diesel, gasoline, etc.) Russia imports all seaborne oil and petroleum products, and the world will also face considerable changes in trade patterns.

Under such circumstances, the demand for crude oil and product tankers may see double-digit growth in 2023. In addition, increased demand for haul distances combined with historically low new vessel orders and the possibility of lower tanker speeds due to new environmental regulations could further support the earnings outlook for tankers.

So why do you think shipping companies that have won year-end bonuses are still not optimistic?

Shipping companies are a barometer of international trade and are greatly affected by politics, economy, and geography. The unoptimistic outlook for 2023 is the consensus of the big names in the shipping industry, but it is not entirely my opinion. Xie Hui, general manager of Evergreen Shipping, once used "the cold wind blows the fallen leaves" to describe the current shipping market.

Although Evergreen has issued year-end awards for dozens of months, its performance in the fourth quarter was not as expected. In addition, several research reports also showed that the supply and demand of the container shipping market are weak, and the prosperity in 2023 will decline. The freight rate of the Shanghai-US West route has dropped by more than 78%, and the freight rate of the Shanghai-Europe route has fallen by nearly 81%. The freight rate of the main route has fallen back to the level at the end of 2020.

At present, many shipping companies are at the junction of profits. With the recovery of China's economy this year, opportunities for China's supply and global procurement may reappear, promoting the shipping industry to a certain extent. However, due to factors such as the economic recession in Europe and other countries and the uncertainty of the conflict between Russia and Ukraine, the shipping market in 2023 is not optimistic, but this is not a bad thing; at least it will make shipping companies calmer and make more rational decisions.


Disclaimer: All the information on this website is provided on an “as is” and “as available” basis, and you agree to use such information entirely at your own risk. Monisight gives no warranty and accepts no responsibility or liability for the accuracy or completeness of the information and materials contained in this website. Under no circumstances will Monisight be held responsible or liable in any way for any claims, damages, losses, expenses, costs, or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption, or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the Monisight has been advised of the possibility of such damages in advance.


Rated 0 out of 5 stars.
No ratings yet

Add a rating
bottom of page