Freight rate observers are forecasting gloomy news for the future of cargo rates.

Xeneta chief executive Patrik Berglund expressed his concern this week that economic uncertainty, geopolitical concerns (including over Ukraine), industrial action on logistics chains, China’s continued zero-Covid policy and the combination of weak demand, easing congestion and increased freight capacity paved the way for an uncertain future and complex challenges facing the freight industry.

Oslo-based Xeneta says it is the creator of the world's largest ocean and air freight rate benchmarking and market analytics platform.

A company statement said: “After over two years of rising rates and overstretched capacity, the rapidly cooling ocean freight market looks set for an extremely challenging 2023."

Air freight analysts are predicting a turbulent year ahead for the air freight market and shipping experts are forecasting declining ocean cargo volumes by as much as 2.5 per cent, with rates dropping significantly along with weak demand.

The statement said: “From climbing to historical highs during the global pandemic, ocean freight rates have fallen away — and in the case of spot rates, dramatically so — since the summer.

“Xeneta’s market report, built on the foundation of the team’s crowd-sourced data from leading global shippers, suggests there’ll be no change in course for 2023, with challenging macroeconomic and geopolitical outlooks undermining confidence.”

Mr Berglund says difficult times await stakeholders right across the ocean and air freight value chain.

He notes: “The cost-of-living crisis is eating into consumer spending power, leaving little appetite for imported, containerized goods. With no sign of a global panacea to remedy that, we’d expect ocean freight volumes to drop, possibly by around 2.5 per cent. That said, if the economic situation deteriorates further, it could be even more.

“Allied to dropping volumes we have a growing world fleet, with a nominal inflow of 1.65m TEU of capacity. Some demolitions will dent that growth, but we still expect an increase in capacity of 5.9 per cent. Even if demolitions double from our current level of expectations, the industry would still be looking at an almost five per cent expansion.”

One area where the ocean freight market may benefit is from a potential reduction in air freight. Xeneta says this segment faces a “bumpy ride”, as lower ocean costs and better scheduled reliability (from easing port congestion and available capacity) may tempt some shippers to make a modal shift.

In a climate of increasing environmental awareness, shippers focused on sustainability may also be tempted to switch ‘general’ cargoes from the skies to the waves.

Mr Berglund added: “To be fair, a shift in general volumes wouldn’t be too significant for the ocean freight carriers, but it would strongly impact on the air segment, where cargoes are obviously far smaller.”