Analysts pointed out that the intensification of the differentiation between the charter market and the trend of spot freight rates indicates that the container shipping market may be entering another round of competition to “grab” market share.
According to the tracking report of the shipping industry network, the current trend of the Shanghai Export Container Composite Freight Index (SCFI) and the Drewry World Container Freight Index (WCI) both show that although the spot freight rate has stabilized after a continuous decline, the trend continues to diverge, the freight rate on the US line rises, and the European line continues to decline.
At the same time, VHBS analysts pointed out that the container charter market is still “strong” and there is no sign of significant change in the short term.
In short, the traditional view is that if freight rates are on a downward trend, the charter market should usually follow, which indicates that the industry as a whole has entered a “recession” stage, and enterprises should “boil” first. However, as far as the current container shipping market is concerned, with the changes in the global trade pattern, the restructuring of liner alliances, and the continuous development of fleet capacity and network, the container shipping market may enter a new stage of “grabbing” market share.
Braemar analysts pointed out, “Term rentals are still at a very high level and transactions are active, as liner companies prefer to lock in capacity rather than risk capacity shortages and route cuts.” ”
“Demand for new ships is also generally strong, and ship transactions are also active.”
Braemar analysts added that this phenomenon raises a “big problem”.
“Despite the decline in freight rates, is it because liner companies are optimistic about the future, or is the container shipping industry once again entering a stage where rationality gives way to competition or market share competition first?”
When ship brokerage Mike Wackett has a strong balance sheet, “liner companies’ strategy is based on business considerations, which is to grab market share from competitors, rather than focusing on financial details.” ”
Braemar warned that “some ship types are aging rapidly; Without the right vessels, liner companies risk falling behind more efficient competitors. In addition, a very strong balance sheet is in play, which may make decisions easier than in the past. ”
Mike Wackett expects the divergence between rates and rents to continue until liners incur quarterly losses. According to him, when this happens, “shareholders will put pressure on them to reduce costs and thus new charterparties, and they will return the ships as soon as they expire.” ”
All in all, the past market has shown that as a “rigid demand” industry, excellent enterprises can not only successfully cross the “cycle”, but also when market growth and opportunities appear, leading liner companies can often rely on core advantages such as brand and network to quickly grasp the strategy of “grabbing” and further consolidate their market position through scale advantages.
