b'12American Journal ofTransportation ajot.com(DELAYEDcontinuedabsolutely key.from page 11) TheEastCoastports new ships by the global alli- are increasingly winning the ancecarriersfor2023andvolumewarwiththeWest 2024,therearesubstantialCoast ports: Ten years ago, differences between the lead- theWestCoastportshad ingcarriers:Forexample,a1.5:1containervolume MSC is going to grow phe- advantageovertheEast nomenally and so is COSCO.Coast ports. In other words, MaerskandYangMingarefor every 1.5 containers that not going to grow much at allwashandledontheWest accordingtotheorderbooks.Coastonly1containerwas This means that some carriershandledontheEastCoast. are going to be very aggres- Thelatestdatashowsthat sive for growth and they willtherearemorecontainers needvolumeforthesenewbeinghandledontheEast vessels. The others are not intoCoastthantheWestCoast. growth at all: they want to sellThis is a very dramatic shift. logistics products or increaseSome of that cargo is coming their unit profitability. This isbacktothe WestCoastbut going to ramp up the pressurenot until a labor contract is between the carriers. in place. IBA forecasts further aviation recovery inu neVenC apaCity There is increasing con-gestionatChineseports: 2023 despitechallenging economic outlook r eDuCtionS Chinachosetogofrom Jensenposedtheques- zeroCovidtoleranceto Increased passenger demand is predictedversus the same period last year. tion of why have the carriers100%inaheartbeatand for 2023 despite a challenging economic envi- In line with this, airline profits will risedonesopoorlyinreducingthat is creating all sorts of ronment, according to data revealed by IBA,modestly in 2023 due to lower unit costs beingcapacityin2023whentheydisruptions there. This per-theleadingaviationmarketintelligenceandpartly offset by lower unit revenue given thewere so efficient in reducingtainstoproductionandto consultancy company.additional industry capacity. IBA concurs withcapacity following the onsetcargo-handling at ports.In its 2023 Market Update webinar, IBAsIATAs forecast that the industry will achieveof the pandemic in 2020. InNorthAmerica,there ISTAT-certified experts explained that desyn- aprofitbarelyabovebreak-evenin2023.Backthen,hesaid,areincreasingcasesofship-chronised global slowdown is already under- According to IATA, regionally, North Ameri- thecarriersmaintainedtheperspushingbackondeten-way, with key measures such as stock marketcan airlines will be the most profitable withfreightratesbecausetheytionanddemurrage,which performance,production,yields,consumerpredicted EBIT margins of 3.3%, with Euro- had to stay alive. becameeasiertochallenge confidence and business confidence all down.pean airlines at 0.6%, and while Asia PacificToday,thecarriersnounderthenewU.S.Ocean airlines continue to lag behind with predictedlongerhavethisalignedShipping Reform Act of 2022. e ConoMiCo utlook average negative margins of -4.7%.interest:ThecompetitiveAs a result of the sharp High inflation and debt remain the biggestWeak airline balance sheets could acceler- pressure is much larger. Theydeclineinspotfreightrates concern for 2023 and while central bank baseate industry consolidation in 2023 as govern- still want to reduce capacity,andcontractrates:we rate changes are now starting to affect infla- ment support comes to an end, according tothey are just not as efficientshouldexpecttoseeadra-tion levels, IBA believes that a mild recessionIBA. North America is the most consolidatedastheywerebackin2020maticworseningincarri-remainsthelikelyoutcome. Withhighcon- with 69% of its capacity within the 10 larg- andhencethismassiverateers financial performance. I sumer and business debt set to impact employ- estairlinegroups,comparedto AsiaPacificcollapse that we have seen. would not be surprised to see ment and consumer spending throughout thewhich is the most fragmented at 35%, whilecarriers adjust their projected year, IBA believes it is paramount to maintainEurope sits in the middle at 49%. IBA believesC hallengeSf aCing2023 profit rates for 2023. I would supply chains in the face of slowing growththatsmallernetworkairlineswithhighunitThe resolution of the fol- alsonotbesurprisedtosee otherwise further inflation is inevitable.costs and a short-haul focus are most at risklowingtrendsandchallengesthatcarrierswouldbecome Looking at oil price factors, crack spreadsfrom consolidation.willdeterminethebusinessloss making in 2023. are forecast to reduce slowly over the next twooutlook in 2023 as well as whoEveryone should be pre-years. Crude price forecasts are split due to a a irCraftV alueS anDl eaSer ateS benefits and who does not: pared for more blank sailings variety of factors including the economic slow- ThefinalsectionofthewebinarlookedTheU.S.labornegotia- as a result of these changing down in Western markets, the Chinese marketat aircraft values and lease rates. IBA statedtions on the West Coast areconditions. recovery,andactionsbyOPEC(Organiza- thatnewaircraftMarketValuesaresetto tionofthePetroleumExportingCountries),recover to pre-pandemic levels while mid-life resulting in a consensus of $95-105. RefinerywidebodieshavefacedBaseValueadjust-throughput is expected to increase by aroundments. For instance, a 12-year-old 777-300ER 3.5% across 2023-2024 which will help reducehad a Base Value of $70.24 million in 2019, crack spread back towards $25-30. and this had dropped to $33.04 million in 2023. IBAbelievesthatthischallengingenvi- Conversely, a new A350-900 had a Base Value ronment is likely to undermine narrowing cur- of $155 million in 2019 which has increased rencyexchangerates,whichdrovenon-USslightly $156.95 million in 2023. airline US$ borrowing and operational costsIBAforecaststhatleaseratesfornew up by between 10-30% in 2022. narrowbody aircraft are set to rise above pre-Supplychainswillstraintosatisfypandemic levels in 2023, driven by tight air-demandintheyearaheadwithproductioncraft supply, rising demand and interest rates. ratesforecastbyIBAtorise,andAirbusNewnarrowbodyleaseratesareforecastto maintainingitsmarketlead,butbacklogrise above pre-pandemic levels in the second levelsareexpectedtoremainflat.Overall,half of 2023. The A220-300s market monthly IBA forecasts that aircraft orders will reachlease rates were $256,000 in October 2019 and 1,950 in 2023 compared to 2,123 in 2022, butare predicted to rise to $278,000 this year. deliveries will move above 1,500 aircraft inPreviousgenerationnarrowbodylease 2023, compared to 1,294 in 2022. ratesarealsoexpectedtogrowthroughthe secondquarterof2023,butnottopre-pan-V oluMeS , C apaCity anDp rofitaBility demic levels. A ten-year-old Boeing 737-800 For2023,globalpassengervolumeiswas at $227,000 per month in October 2019 forecasttogrowby22%year-on-year.IBAwith IBA forecasting these to sit at $190,000 believesthatpassengerdemandhashistori- by July 2023.callybeenresilienttoGDPweakness,withWidebody aircraft lease rates are set to lag 2023expectedtosee4.2billionpassengers2019 levels this year with a slower value recov-compared to 2019 levels of 4.5 billion. IBAery. A twelve-year-old Boeing 777-300ER was explains that demand remains strong and thereat $420,000 per month in January 2019 and remains pent-up demand from the pandemic. is predicted to be at $350,000 by July 2023. Whereas in 2022 the recovery was mainlyHowever, new aircraft lease rates are forecast driven by short-haul and leisure, 2023 will seeto be recovering more strongly but still lagging a strong rise in long-haul capacity and also seebehind 2019 levels, with the A350-1000 being business travel recover to pre-pandemic levels.at $1.254 million per month in October 2019 The key transatlantic route will see a materialwith a forecast level of just below $1.2 million 17% increase in capacity in the second quarterin July 2023.Maersk will want to sell logistics products or increase their unit profitability.'