The shipping industry is considered a crucial barometer reflecting the trends of the global economy, and particularly the container shipping sector, dealing with consumer goods, is known to react sensitively to economic and political changes. In 2024, container shipping is expected to be influenced by the complex changes in the shipping industry environment, global economic conditions, and political situations, which will likely have a significant impact on shipping freight rates. Consequently, 2024 is anticipated to be a challenging year for predicting container freight rates. In this context, it is essential for shippers and the shipping industry to closely analyze the trends in the container market and formulate appropriate response strategies. This column will deal with the detailed aspects of demand, supply, and freight rates in the container shipping market. 1. Demand Global Economic Outlook
In 2024, various institutions project the global economic growth rates, with the OECD forecasting 2.7% (a 0.2% point decrease from 2023 as of November 2023), the IMF projecting 2.9% (a 0.1% point decrease from 2023 as of October 2023), and the KIEP (Korea Institute for International Economic Policy) forecasting 2.8% (a 0.2% point decrease from 2023 as of November 2023). These projections indicate a somewhat lower growth rate compared to 2023 and are notably below the pre-pandemic average growth rate of 3.4% from 2015 to 2019.
In 2024, various institutions project the global economic growth rates, with the OECD forecasting 2.7% (a 0.2% point decrease from 2023 as of November 2023), the IMF projecting 2.9% (a 0.1% point decrease from 2023 as of October 2023), and the KIEP (Korea Institute for International Economic Policy) forecasting 2.8% (a 0.2% point decrease from 2023 as of November 2023). These projections indicate a somewhat lower growth rate compared to 2023 and are notably below the pre-pandemic average growth rate of 3.4% from 2015 to 2019.
[Global Economic Growth Rate Outlook (Year-Over-Year)] 
(Source: OECD, IMF, and KIEP’s Reports [1;2;3])
(Source: OECD, IMF, and KIEP’s Reports [1;2;3]) Inflation is also a significant variable. Global inflation for the year 2024 is expected to be 4.1% (IMF, October 2023). While this represents a decrease of 2.4% points compared to the previous year, it still remains at a relatively high level compared to the past. This projection takes into account supply chain issues, downward rigidity of service prices (where once increased, service prices are not easily lowered), reduced oil production, and geopolitical risks. As a result, there is a possibility that the shipping industry, particularly in the form of increased fuel and operational costs, may be affected.
[Global Inflation Forecast (Year-Over-Year)] 
(Source: IMF [2])
(Source: IMF [2]) Additionally, changes in interest rates have a significant impact on consumer spending behavior. According to the Federal Reserve, the median projection for U.S. interest rates at the end of 2024 is 4.6%, indicating a 75 basis points (1 basis point = 0.01% point) decrease from the current range of 5.25% to 5.5%. With inflation easing and economic slowdown, a reduction in base interest rates is expected in most countries, including the U.S. This could potentially lead to an increase in consumer spending and a rise in cargo volume within the shipping industry compared to the trends observed in the year 2023.
The fluctuations in these economic indicators directly impact the shipping market, especially cargo volume. A decrease in economic growth rates can lead to a reduction in cargo volume, while the rise in inflation and interest rate fluctuations may pose operational challenges such as increased operating costs and decreased cargo volume. Therefore, the shipping industry needs to closely monitor these global economic trends and formulate flexible response strategies to effectively cope with economic volatility.
The fluctuations in these economic indicators directly impact the shipping market, especially cargo volume. A decrease in economic growth rates can lead to a reduction in cargo volume, while the rise in inflation and interest rate fluctuations may pose operational challenges such as increased operating costs and decreased cargo volume. Therefore, the shipping industry needs to closely monitor these global economic trends and formulate flexible response strategies to effectively cope with economic volatility.
[U.S. Interest Rate Outlook (%)] 
(Source: FED [4])
(Source: FED [4]) Cargo Volume Outlook
Global container cargo volume is directly influenced by the worldwide economic situation, and this impact has been pronounced in recent years. Due to the pandemic, there was a 1.5% decrease in 2020 compared to the previous year. Subsequently, in 2021, with economic stimulus measures such as interest rate cuts, consumption increased, leading to a 6.6% rise in cargo volume. However, in 2022, the Russia-Ukraine war resulted in inflation and interest rate hikes, leading to a decrease in consumption and a 3.7% decline in cargo volume. In 2023, as inflation moderated, there was a slight 0.5% increase in cargo volume. Examining cargo volume by routes, in 2023, the route in the Asia region experienced a 1.4% decrease, while the Europe route saw a 7.2% increase, and the North America route decreased by 4%.
According to Clarkson's forecast, the global container cargo volume outlook for 2024 is approximately 208.54 million TEUs, representing an increase of about 3.7% compared to 2023. Maritime Strategies International provides a more optimistic projection, anticipating a growth rate of 4.5% for 2024. This upward trend is primarily associated with the cessation of interest rate hikes in the U.S., interpreted as reflecting expectations of recovery in consumer and corporate demand. Breaking it down by routes, the forecast suggests that the route within Asia will experience a 3.4% increase to 89.42 million TEUs, the Europe route will see a 1.5% rise to 16.75 million TEUs, and the North America route is expected to increase by 6.5% to 22.49 million TEUs. (Clarksons [5]).
These two institutions’ forecasts provide an optimistic view of the shipping market. The end of interest rate hikes can inject vitality into the economy, particularly having a positive impact on trade-related activities. This, in turn, has the potential to lead to an increase in container cargo volume. However, it's important to note that these predictions are subject to change depending on the circumstances. For instance, early in 2023, major institutions predicted 2024 container cargo volume differently: Clarkson at 1.6%, Drewry at 1.9%, and Industrial Bank at 2.1%. These figures were similar to the 1.9% increase projected in the ocean freight prediction project that I participated in with Samsung SDS. However, despite these forecasts, the actual increase in cargo volume in 2023 turned out to be lower than expected, at only 0.5%.
Global container cargo volume is directly influenced by the worldwide economic situation, and this impact has been pronounced in recent years. Due to the pandemic, there was a 1.5% decrease in 2020 compared to the previous year. Subsequently, in 2021, with economic stimulus measures such as interest rate cuts, consumption increased, leading to a 6.6% rise in cargo volume. However, in 2022, the Russia-Ukraine war resulted in inflation and interest rate hikes, leading to a decrease in consumption and a 3.7% decline in cargo volume. In 2023, as inflation moderated, there was a slight 0.5% increase in cargo volume. Examining cargo volume by routes, in 2023, the route in the Asia region experienced a 1.4% decrease, while the Europe route saw a 7.2% increase, and the North America route decreased by 4%.
According to Clarkson's forecast, the global container cargo volume outlook for 2024 is approximately 208.54 million TEUs, representing an increase of about 3.7% compared to 2023. Maritime Strategies International provides a more optimistic projection, anticipating a growth rate of 4.5% for 2024. This upward trend is primarily associated with the cessation of interest rate hikes in the U.S., interpreted as reflecting expectations of recovery in consumer and corporate demand. Breaking it down by routes, the forecast suggests that the route within Asia will experience a 3.4% increase to 89.42 million TEUs, the Europe route will see a 1.5% rise to 16.75 million TEUs, and the North America route is expected to increase by 6.5% to 22.49 million TEUs. (Clarksons [5]).
These two institutions’ forecasts provide an optimistic view of the shipping market. The end of interest rate hikes can inject vitality into the economy, particularly having a positive impact on trade-related activities. This, in turn, has the potential to lead to an increase in container cargo volume. However, it's important to note that these predictions are subject to change depending on the circumstances. For instance, early in 2023, major institutions predicted 2024 container cargo volume differently: Clarkson at 1.6%, Drewry at 1.9%, and Industrial Bank at 2.1%. These figures were similar to the 1.9% increase projected in the ocean freight prediction project that I participated in with Samsung SDS. However, despite these forecasts, the actual increase in cargo volume in 2023 turned out to be lower than expected, at only 0.5%.
[Global Container Cargo Volume (M TEU)] 
(Source: Clarksons[4])
(Source: Clarksons[4]) [Container Cargo Volume by Key Routes (M TEU)] 
(Source: Clarksons[4])
(Source: Clarksons[4]) 2. Supply Delivery
During the pandemic period, the increase in shipping freight rates was attributed to a sharp rise in new orders for container ships. In particular, in 2021, the newbuilding orders for container ships amounted to approximately 4.49 million TEUs. This figure represents a substantial increase, being about 5.7 times higher when compared to the 0.78 million TEUs recorded in 2019. These large-scale orders were expected to have a significant impact on the future shipping market.
The ships ordered during the pandemic period began to be delivered over a period of approximately two years. Starting from 2023, the delivery of these large container ships has gained momentum. Looking at the data for 2023, the delivery of container ships with a capacity of over 8,000 TEUs was 130,000 TEUs in May, 230,000 TEUs in June, 170,000 TEUs in July, and 120,000 TEUs in August. In December, 150,000 TEUs were delivered. These figures represent increases of 458%, 99%, 169%, 406%, and 191% compared to the same months in the previous year, indicating a substantial influx of container ship capacity into the shipping market.
During the pandemic period, the increase in shipping freight rates was attributed to a sharp rise in new orders for container ships. In particular, in 2021, the newbuilding orders for container ships amounted to approximately 4.49 million TEUs. This figure represents a substantial increase, being about 5.7 times higher when compared to the 0.78 million TEUs recorded in 2019. These large-scale orders were expected to have a significant impact on the future shipping market.
The ships ordered during the pandemic period began to be delivered over a period of approximately two years. Starting from 2023, the delivery of these large container ships has gained momentum. Looking at the data for 2023, the delivery of container ships with a capacity of over 8,000 TEUs was 130,000 TEUs in May, 230,000 TEUs in June, 170,000 TEUs in July, and 120,000 TEUs in August. In December, 150,000 TEUs were delivered. These figures represent increases of 458%, 99%, 169%, 406%, and 191% compared to the same months in the previous year, indicating a substantial influx of container ship capacity into the shipping market.
[Container Ship Delivery (TEU)] 
(Source: Clarksons[4])
(Source: Clarksons[4]) Container Ship Capacity
As of the end of 2023, the global container ship capacity reached 27.83 million TEUs, signaling a significant change in the shipping industry. This figure represents an increase of approximately 8.3% compared to 25.7 million TEUs in 2022, marking the highest growth rate in the past decade.
As of the end of 2023, the global container ship capacity reached 27.83 million TEUs, signaling a significant change in the shipping industry. This figure represents an increase of approximately 8.3% compared to 25.7 million TEUs in 2022, marking the highest growth rate in the past decade.
[Global Container Ship Capacity (10,000 TEU)] 
(Source: Clarksons[4])
(Source: Clarksons[4]) In 2015, the container ship capacity was 19.9 million TEUs, showing an 8.4% increase compared to the previous year. Following this, the shipping industry experienced a downturn until the period before the pandemic. Against this backdrop, the recent increase in container ship capacity reflects the strong performance of the shipping market during the pandemic. However, for liner companies, it can also be interpreted as pressure for adaptation and competition. The current backlog of orders for container ships is substantial. As of the end of 2023, the backlog for orders of container ships with a capacity of over 8,000 TEUs reached approximately 5.57 million TEUs, the highest level since 2014. This indicates a significant presence of container ships to be delivered in the future. It is anticipated that by 2024, the container ship capacity will reach 29.8 million TEUs, signifying an approximately 7.09% increase compared to 2023. These changes are expected to have a significant impact on the shipping industry.
The delivery of a large number of container ships can contribute to the stabilization of freight rates, but simultaneously, it may lead to intensified market competition and pressure on freight rate reduction due to oversupply. The shipping industry needs to respond flexibly and strategically to these market changes. To achieve this, a focus on analyzing market trends, improving operational efficiency, and developing long-term business plans (such as diversification of business) is crucial. Through such an approach, the shipping industry can effectively cope with market volatility and strive for long-term stability and growth.
The delivery of a large number of container ships can contribute to the stabilization of freight rates, but simultaneously, it may lead to intensified market competition and pressure on freight rate reduction due to oversupply. The shipping industry needs to respond flexibly and strategically to these market changes. To achieve this, a focus on analyzing market trends, improving operational efficiency, and developing long-term business plans (such as diversification of business) is crucial. Through such an approach, the shipping industry can effectively cope with market volatility and strive for long-term stability and growth.
[8,000 + TEU Orderbook (10,000 TEU)] 
(Source: Clarksons[4])
(Source: Clarksons[4]) 3. Freight Rate Outlook The outlook for container freight rates in 2024 needs to be approached from the perspective of supply and demand balance. According to predictions from Clarkson and MSI, the growth rates for cargo volume in 2024 are forecasted to be approximately 3.7% and 4.5%, respectively. In contrast, the growth rate for container ship capacity, according to Clarkson, is expected to reach 7.09%. According to a project conducted by me in collaboration with Samsung SDS, Chinese container export volume is expected to increase by around 3.9%, while container ship capacity is anticipated to grow by approximately 7.3%. When considering the forecasts from these research institutions and the analysis from my project, it appears that the demand growth rate may not keep pace with the increase in supply, indicating a less favorable freight rate outlook compared to the previous year. However, it's important to note that various variables exist.
In situations where the supply and demand balance is unfavorable, ocean carriers are expected to adopt various strategies to defend freight rates. Strategies such as blank sailing, slow steaming, and General Rate Increases (GRI) will likely be employed to manage supply and demand imbalances and stabilize freight rates. These strategies will have an impact on freight rates. Further details can be found in the article "Freight Rate Defense Strategy of Ocean Shipping Companies (Cello Square) [6]”
Ocean freight rates are significantly influenced by global issues. For example, factors such as an increase in toll fees due to drought in the Panama Canal, issues in the Suez Canal and the Red Sea due to the war between Israel and Hamas, and the increase in scrapped ships that fail to meet IMO regulations due to eco-friendly regulations can impact freight rates. The current risk in the Suez Canal route is highlighted by attacks on civilian ships passing through the Red Sea by Yemen's Houthi rebels. In this supply and demand imbalance situation, the Comprehensive SCFI recorded 1,896 points in the first week of January 2024, showing a 91% increase compared to the 993 points at the end of November 2023. Additionally, in 2024, the expected abolition of the Consortia Block Exemption Regulation (CBER) is anticipated to bring significant changes to the liner industry. For instance, Hapag-Lloyd is set to leave THE Alliance and start a new partnership with Maersk known as the Gemini Cooperation starting from February 2025. Further details on this matter will be covered in the next column.
In situations where the supply and demand balance is unfavorable, ocean carriers are expected to adopt various strategies to defend freight rates. Strategies such as blank sailing, slow steaming, and General Rate Increases (GRI) will likely be employed to manage supply and demand imbalances and stabilize freight rates. These strategies will have an impact on freight rates. Further details can be found in the article "Freight Rate Defense Strategy of Ocean Shipping Companies (Cello Square) [6]”
Ocean freight rates are significantly influenced by global issues. For example, factors such as an increase in toll fees due to drought in the Panama Canal, issues in the Suez Canal and the Red Sea due to the war between Israel and Hamas, and the increase in scrapped ships that fail to meet IMO regulations due to eco-friendly regulations can impact freight rates. The current risk in the Suez Canal route is highlighted by attacks on civilian ships passing through the Red Sea by Yemen's Houthi rebels. In this supply and demand imbalance situation, the Comprehensive SCFI recorded 1,896 points in the first week of January 2024, showing a 91% increase compared to the 993 points at the end of November 2023. Additionally, in 2024, the expected abolition of the Consortia Block Exemption Regulation (CBER) is anticipated to bring significant changes to the liner industry. For instance, Hapag-Lloyd is set to leave THE Alliance and start a new partnership with Maersk known as the Gemini Cooperation starting from February 2025. Further details on this matter will be covered in the next column.
[SCFI Comprehensive Index)] 
(Source: Clarksons[4])
(Source: Clarksons[4]) 4. Conclusion This column dealt with the outlook for the container shipping market in 2024 from the perspectives of demand, supply, and freight rates. The situation appears to unfold with an unfavorable supply and demand balance compared to 2023, and there is a significant possibility of being strongly influenced by global issues. For example, events like the increase in toll fees due to drought in the Panama Canal and the instability in the Suez Canal and the Red Sea region due to the conflict between Israel and Hamas are expected to impact the shipping market. Additionally, the abolition of the CBER is anticipated to bring about significant changes in the liner business.
In such uncertain circumstances, measures that shippers can take include the following: Firstly, it is crucial to diversify transportation routes and suppliers through a diversified strategy, reducing dependency on a single region or source. Additionally, considering long-term contracts can be beneficial to minimize the volatility of freight rates and secure a stable supply chain. Alongside this, developing contingency plans for situations such as political or economic instability, or unexpected natural disasters is necessary. Finally, utilizing real-time freight rate verification, transportation tracking, and digitalized supply chain management systems can enhance efficiency and help manage risks effectively. These strategies enable shippers to effectively respond to the volatility and uncertainty in the shipping market, maintaining efficient supply chain management. # Reference [1] Organisation for Economic Co-operation and Development.
[2] International Monetary Fund.
[3] Korea Institute for International Economic Policy
[4] Federal Reserve Board.
[5] Clarksons Shipping Intelligence Network.
[6] https://www.cello-square.com/kr-ko/blog/view-833.do
▶ This content is protected by the Copyright Act, and the copyright is held by the contributor.
▶ This content is prohibited from secondary processing and commercial use without prior consent.
In such uncertain circumstances, measures that shippers can take include the following: Firstly, it is crucial to diversify transportation routes and suppliers through a diversified strategy, reducing dependency on a single region or source. Additionally, considering long-term contracts can be beneficial to minimize the volatility of freight rates and secure a stable supply chain. Alongside this, developing contingency plans for situations such as political or economic instability, or unexpected natural disasters is necessary. Finally, utilizing real-time freight rate verification, transportation tracking, and digitalized supply chain management systems can enhance efficiency and help manage risks effectively. These strategies enable shippers to effectively respond to the volatility and uncertainty in the shipping market, maintaining efficient supply chain management. # Reference [1] Organisation for Economic Co-operation and Development.
[2] International Monetary Fund.
[3] Korea Institute for International Economic Policy
[4] Federal Reserve Board.
[5] Clarksons Shipping Intelligence Network.
[6] https://www.cello-square.com/kr-ko/blog/view-833.do
▶ This content is protected by the Copyright Act, and the copyright is held by the contributor.
▶ This content is prohibited from secondary processing and commercial use without prior consent.
