A global challenge awaits shipping right after hailing in the new year – recession.

Several analysts have pointed to flaring red flags for some time, and that might hit carriers in 2023.

”Recession and shipping doesn’t mix well, so global demand will probably prove as the biggest challenge,” says shipping analyst at DNB Markets Jørgen Lian.

Financial analyst firm Kepler Chevreux also points to a potential financial crisis as the main reason for concern for shipping.

”The ways of global economy will likely be shipping’s biggest challenge in 2023,” says analyst Anders Redigh Karlsen.

DHL and Maersk express concern

Several carriers have already expressed concern for the projections of the year to come.

In its latest quarterly report, major South Korean carrier HHM also commented on the difficult times ahead.

”Container demand is expected to drop on account of significant uncertainties primarily pertaining to widespread inflation, economical slowdown and geopolitical tension,” the report read.

Maersk and DHL have also sent alarms flaring.

”Europe is by any account the real patient here, but Europe is also a massive economy, and together with the US, we can easily draw the entire world into recession,” said chief exec Søren Skou in connection to 2022’s third-quarter report.

Not all shipping execs, however, lose sleep over looming recession forecasts.

In November, DFDS CEO Torben Carlsen said that the carrier has years of experience in handling global crises, and that the company is quick to adapt to changing circumstances as a consequence.

”That is also why we’re not overly concerned with a potential recession. We keep a watchful eye on day-to-day developments, but we have no doubt that we are able to meet the challenges brought about by all this head on,” he told ShippingWatch.

German carrier Hapag-Lloyd also believes the precipitous rate drops within container are behind us.

”Looking at the market right now and towards the end of the year – and in run-up to the Chinese New Year – I think we see a little bit of recovery in demand,” said Chief Executive Rolf Habben Jansen earlier in December.

Not all grim

Even though higher energy costs, increasing interest rates, inflation and a tightening of purse strings from companies and consumers alike dominate current market outlooks, its not all grim for carriers.

Jørgen Lian from DNB Markets eyes several bright spots for carriers. He especially highlights that a deluge of new environmental regulations could have a positive effect across segments.

”The industry faces major regulatory challenges which should increase fleet efficiency and freight markets. Additionally, as a side-effect of increasing inflations, carriers’ underlying values should go up benefitting shipping markets’ appeal on a short-term basis,” the analyst predicts.

”In many ways, the sector stands to gain, unless companies are eaten away by expensive debts and unreasonable gearing ratios.”

English edit: Simon Øst Vejbæk

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