Container market shows ‘no encouraging signs’ of recovery: HMM

November 13, 2023

HMM presented a grim assessment of the container shipping market Friday as the carrier reported a sharp decline in profitability with earnings continuing their sequential quarterly slide off the record results of last year despite a significant increase in volume through the third quarter. 

“Container demand is expected to be under downward pressure with no encouraging sign of restoring desire for consumption,” HMM noted in its results announcement, attributing the gloomy outlook to widespread inflation, the economic slowdown and rising geopolitical tensions. 

The South Korean carrier’s third quarter and nine-month results followed the same pattern of its peers such as Maersk and Hapag-Lloyd with sharp declines reported across all financial segments as increasing volume was undermined by falling freight rates. 

In such an uncertain and volatile market, and with profitability not far above the loss-making line, HMM is focusing on cost cutting and the improvement of operational efficiency. 

The main driver of the decline in rate levels across most trade lanes is the excess capacity currently in service and the large number of new ships scheduled for delivery through the next 18 months. 

The global order book capacity is close to 30% of the active fleet at more than 7 million TEUs, with Drewry estimating 2.5 million TEUs of capacity will be delivered by the end of this year and three million TEUs in 2024.  

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