Financial Services Association, May 18 (Editor Liu Rui) Global shipping pressure has continued to rise recently due to the intensification of the Red Sea crisis and the recovery in European consumer demand. The world's leading shipping companies such as Maersk, Dafei, and Hapag-Lloyd have recently disclosed information on route price increases, covering routes from Asia to Europe, North America, and South America.

However, on Friday local time, the world's third-largest container shipping company, France's Dafei Shipping Company, predicted when announcing its first-quarter earnings report that as the speed of delivery of new ships accelerates, global shipping capacity will be boosted, and shipping costs are expected to decline in the future.

Shipping costs are expected to fall

Dafei Shipping Group wrote in the report that previously, due to the Red Sea turmoil, many ships were forced to be diverted, and freight demand was better than expected, causing global capacity to be tight for a while. But this probably won't last long.

The company's chief financial officer, Ramon Fernandez, said in a conference call: “The situation in the Red Sea has absorbed almost all of the new production capacity put on the market in the first quarter.”

He predicted that the upward pressure on freight rates due to regional conflicts and strong consumer demand “will decline in the second half of this year.”

In January of this year, as the risk of the situation in the Red Sea region intensified, global shipping prices soared for a while. Many ships traveling between Asia and Europe have been forced to make detours to the Cape of Good Hope, leading to an increase in shipping routes and a decrease in capacity.

However, capacity is gradually increasing as new ships purchased by major shipping companies are put into use.

Fernandes predicts that the global fleet will grow by 10% this year, and will also grow by about 7% in the future. “This will lead to overcapacity in the shipping industry.” , “The detour to the Cape of Good Hope will not be enough to absorb excess capacity.”

Seafaring capacity is expected to increase

According to financial reports released by Dafei Shipping, the company's profit for the first quarter was 785 million US dollars, a sharp drop from 2.01 billion US dollars in the same period last year.

The global shipping industry boomed in 2021 and 2022 due to the impact of the COVID-19 pandemic. At the time, freight prices soared for a while, and the profits of major shipping companies reached record highs.

With this windfall, Dafei and other shipping giants increased their orders for the previous two years, and these ships are now in service.

In addition to Dafei, Maersk, the world's second-largest container shipping company, also recently predicted that there will generally be excess global capacity in the second half of this year, which means freight rates will drop.

Editor/Somer