A recent report by analyst Maritime Strategies International (MSI) predicts a positive outlook for container carriers operating between Asia and North Europe in 2024. The report cites emerging signs of a demand recovery in the medium term, as inventories are replenished. The Trans-Pacific route is expected to experience healthy growth in the upcoming year, while other secondary trade routes originating in Asia are also expanding.

MSI’s October Horizon monthly review projects a year-on-year (y/y) increase in Asia to North Europe volumes starting in Q4 2023, offering relief to carriers contending with the challenge of filling their new mega-max vessels. However, MSI warns that strict capacity management is still needed to counter the potential oversupply of newbuild ships, as risks are “still weighted to the downside”. Another 2.6 million twenty-foot equivalent units (TEU) of new capacity is scheduled for delivery by the end of Q2 2024, and many of the deliveries are ultra-large vessels that will be deployed on Asia-Europe services.

For the Asia-Europe Westbound trade, MSI forecasts a 2.9% growth in the first half of 2024. The Trans-Pacific Eastbound trade is expected to see a robust year-on-year increase of 4.6% in H1 2024. Meanwhile, the report acknowledges persisting risks for both regions. “There are still clear downsize risks for both regions, most importantly the prospect of their economies falling into a recession in Q4 2023 and H1 2024, as it is likely that interest rates will stay higher for longer, and this could end up having a cumulative negative impact on growth.”

Despite these risks, the report notes that the key secondary trades originating in Asia, such as to Latin America, Africa and the Middle East, and Indian sub-continent “continued to grow at impressive rates”, with August expansion y/y at 18.6%, 26.1% and 27.6%, respectively.

The Far East-Oceania southbound trade also recorded positive YoY growth of 3.6% in August and is expected to return to growth in Q3 and Q4 after eight straight quarters of contractions.

Overall, the report paints a cautiously optimistic picture of the container shipping market for 2024. While there are some downside risks, such as the possibility of a recession in major economies, the report expects to see healthy growth in demand on key trade routes.

Source: The Loadstar