Ocean carriers are expecting large numbers of ships they ordered during the COVID-19 pandemic to be delivered this year—just when many experts expect the global economy to slide into recession, according to Bloomberg.
What’s going on: “Looking to invest record profits made during the pandemic into craft that burn cleaner fuel, container lines went on a buying spree at South Korean and Chinese shipyards, where construction can take 18 months or longer. Many of those new vessels will start arriving in 2023, a year in which many analysts are predicting global trade will stagnate due to a combination of shocks, including the risk that some of the biggest economies will tip into recession.”
- Current new-vessel orders are at more than 900 ships, which will bring significant added cargo capacity.
Why it’s important: The oversupply could keep shipping costs—which have already declined 80% from their pandemic peaks—down and spur further consolidation, especially if international economies begin to falter as predicted.
The last word: “Market forces driving down container prices and shipping costs are a net positive for manufacturers who confronted unprecedented price hikes over the past three years,” said NAM Director of Infrastructure, Innovation and Human Resources Policy Ben Siegrist.
- “However, greater consolidation—and limited options—among global ocean carriers presents additional concerns related to port calls, route servicing and overall reliability. The NAM will continue to push for a sensible regulatory framework where potential government intervention may be called for to advance national manufacturing competitiveness.”