The Great Reassessment: The Supply Chain Edition

The logistics landscape is changing. Like the employment market in the pandemic, the need to unexpectedly adjust creates the opportunity to re-think. Sometimes the change is tactical – a reversible reaction – and things return to normal. Other times it leads to be a more structural change. Anticipating the forward shape of the supply chain means thinking about what’s driving participants’ decisions now, how those decisions roll-up and to what extent those moves are structural versus tactical. Contract rates will start the trend to normalise in 2024. Forward indications (eg, current production and exporting disruptions in China, second-half 2022 US retailer import projections) suggest that the second half of 2023 will not look much different than 2022, meaning annual rate negotiations at the start of 2023 will not look much better than 2022. Signals of relief are starting to show. A report from Danish Ship Finance shows an anticipated 12% vessel capacity growth between 2023 and 2024, driven mostly by 12,000 teu+ vessels – double that of demand growth. More structural landside changes in the US will begin to come online during 2023, factoring into the 2024 contract negotiations.

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OODA Analyst

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