Speaking at TPM25, liner analyst and CEO of Vespucci Maritime, Lars Jensen, asserted that the container market is unaffected despite declines in spot rates on the main East-West routes. “I really don’t think the market is that weak – demand remains strong, and the number of boxes being moved globally is still very high,” he stated, highlighting a that 6% year-over-year growth in global container volumes.

However, Jensen noted that supply stability has been disrupted as carriers adjust to their new networks and alliances. He believes the current downturn is temporary, assuming that there will be no recession this year, and no immediate return to the Suez Canal transits. “Don’t confuse the current low rates for a structurally weak market,” he said

If the Suez reopens, Jensen expects it to occur quickly and chaotically, triggering congestion in European ports and capacity challenges. He warned that this situation would likely result in equipment shortages in Asia “two or three months later” and said shippers could “expect added surcharges” as a result.

Jensen predicts a significant drop in freight rates once the congestion and shortages resolve. He pointed out that while the global fleet expanded 11% last year, demand only grew by 6%, so overcapacity will be unavoidable. According to his assessment, when the Suez transits resume, European retailers will likely adjust supply chains, potentially decreasing demand on Asia-Europe routes by as much as 10%.

Source: The Loadstar