| New vessel orders combined with plummeting cargo volumes have extended a drop-off in shipping rates — just as ocean carriers and importers met this week to hammer out details of upcoming contracts. The mood of the TPM23 conference at Long Beach, California — captured in the 'Picking Up the Pieces' theme — was mixed, and it wrapped up by midweek with very few deals signed. That's because the collapse in rates is tricky for businesses on both sides of the negotiations. More From TPM23: Importers are waiting for rates to drop further before signing any deals with carriers, which are starting negotiations at about $2,000 a unit on the Asia to US West Coast route, compared with the $1,500 starting offer from many shippers (and an even-lower spot rate). Ocean liners sitting on piles of cash earned during the pandemic era's surge in rates urged potential customers at the conference to look to the future and forgive any hard feelings. Several retailers and importers Bloomberg spoke with said they were holding off on signing contracts until the spot price — now closer to $1,000 from Asia to Southern California — is more in line with the long-term rates offered by carriers. Many cargo owners agreed to higher rates over the past few years to guarantee space on ships for their goods and are still paying up, causing some sour feelings to linger. But the icy atmosphere showed signs of thawing, with the TPM23 party circuit returning after last year's far more dour gathering. Managing Capacity Meanwhile, the surge in capacity on container ships has the importers concerned that carriers will increase "blank sailings" — canceling trips at the last minute instead of taking ships out of service. It takes time to turn a container ship around and even more to change up service schedules, Wan Hai Lines Vice Chairman Randy Chen said. "We needed a breather. The breather is what worked that congestion out. And as a result, we should be heading toward predictable capacity." MSC Chief Executive Soren Toft acknowledged the extra capacity MSC and other ocean liners are continuing to add amid the drop-off in demand. "It takes very little to tip the balance," Toft said, adding that he still believes conditions will pick up in the second half of this year. Early Thursday, Hapag-Lloyd published annual results that showed profit nearly doubled in 2022. "But the economy has cooled and a significant decrease in earnings remains inevitable," Germany's biggest carrier said. "So we will continue to act flexibly in the market and keep a close eye on our costs." 'Full-On Rate War' Lars Jensen, a veteran container expert and the head of Vespucci Maritime, wrapped things up Wednesday with a dose of context. "Market demand is crashing but we've seen this cycle before," he said. Jensen predicted environmental rules this year would help to mitigate some of the overcapacity as older ships get scrapped and others slow steam to cut emissions but it won't be enough to bring prices up. "We appear to be heading into a full-on rate war," he said, but it might not last long. If stockpiled inventory clears this spring and consumer demand holds up, Jensen predicted a strong peak season over the summer with freight rates climbing back up. In another scenario, consumers could stop spending if they get spooked by inflation, or just decide to spend on services instead of goods, in which case 2023 could be quite bad, he said. Here's another take, from Bloomberg Intelligence's Kenneth Loh and Lindsay Chen: "Fresh reports of China's factory activity expanding at the fastest pace in more than a decade in February could, however, potentially slow the spot-rate decline in the coming weeks."
Addition Reading: —Laura Curtis in Los Angeles | 
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