By Jennifer Chang.    Photo：Matthis Volquardsen

Between 2021 and 2022, ocean shipping rates reached historic highs, hitting their peak, while service quality (route timeliness and stability) hit historic lows. During that time, cargo owners repeatedly lowered their expectations for shipment timeliness, focusing only on securing container space, with little concern about when the cargo would actually arrive. Ship companies, on the other hand, felt helpless in the face of port congestion issues. However, as of 2023, the market has experienced a sharp downturn, with cargo volumes and prices returning to pre-pandemic levels. Ship companies have started to incur losses, and the situation is expected to worsen in the fourth quarter.

What to do with excess capacity? " suspension of services, slow steaming,or scrapping of vessels " are strategies commonly adopted by shipping companies in response to market fluctuations and operational pressures. While not innovative, these strategies are effective. For new vessels, companies can try to delay delivery as much as possible, but the extent is limited. Reducing speed refers to lowering a ship's sailing speed to save on fuel costs, which can help reduce expenses during times of high fuel prices or insufficient market capacity. However, this can result in longer voyage
times, further diminishing service quality, and potentially leading to a loss of customers. Slow steaming was implemented years ago, but the scope for further slowing down is limited and cannot significantly impact surplus capacity. Scrapping ships involves selling or dismantling older vessels.
Ship scrapping is minimal compared to new ship deliveries and does not alter the supply-demand balance. Even with these measures, when the capacity of newly built vessels accounts for 30% of the overall operational capacity, these measures can only temporarily alleviate the problem of excess
capacity, and their impact is limited. The fundamental issue of supply exceeding demand remains unchanged. Thus, the last resort is "ceasing sailings (empty legs, skipping ports)." This entails shipping companies adhering to their planned routes but not loading any cargo when docking,
essentially transporting empty ships along the original route. Alternatively, shipping companies may choose to cancel a scheduled port call on a specific route or abandon the original voyage plan in response to changes in market demand or other factors. This can help shipping companies cut costs and avoid unnecessary stops.

The frenzy of container scarcity and soaring freight rates has come to an end, and it's estimated that the kind of once-in-a-century boom seen in the past two years is unlikely to happen again. As of 2023, more than half the year has passed in various expectations, disruptions, and anxieties. What lies ahead? What will the future look like? How severe is the market situation? The latest report from the internationally renowned maritime consultancy Alphaliner reveals that since the beginning of the fourth quarter, the number of idle container ships globally has surged once again. Currently, there are 315 vessels with a total capacity of 1.18 million TEU (Twenty-foot Equivalent Units) in an idle state worldwide.  The instability of vessel schedules and rate is becoming the "new norm" lead by the
imbalance in supply and demand in the maritime industry.

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