According to logistics managers, the global shipping market is self-correcting faster than forecast, reflected in the rapid decline in freight rates. This reflects a drop in trade after a period of explosive growth during the Covid-19 pandemic.
According to CNBC, in a recent letter to customers, shipping company HLS said: “Initially, we forecast that the market will correct itself and return to normalcy at some point. in 2023, but that happened earlier than we expected.”
Mr. Alan Baer, CEO of OL USA, said that the peak of ocean freight rates was set in the second quarter of this year. “Since then, a steady decline has taken place,” said Mr. Baer, adding that the market may have bottomed out in November. Still, he said, “it’s still too early to tell if this is the case. trend or not”.
Despite the sharp decline in ocean freight rates, major shipping lines still profited a total of nearly $122 billion in the first three quarters of this year, according to CEO Alan Murphy of analytics firm Sea-Intelligence.
Trade data shows that imports of goods from Asia into the US in October fell 11% year-on-year, after falling in September. “We don’t see any basis for getting lost. November,” HLS said in a letter to clients.
Contractual ocean freight rates recorded a 5.7% drop in November from the previous month, marking the third consecutive month of declines, according to analyst Peter Sand of shipping market tracking firm. Xeneta sea download. “For many shipping lines, a drop in ocean freight rates will end a streak of consecutive quarterly increases,” said Mr. Sand.
Mr. Sand also forecast that the current challenging environment will continue given the sharp decline in orders received by manufacturers in China, and the forecast by logistics managers that demand will not return. normal levels before the summer of 2023.
During the Covid-19 pandemic, the global demand for goods increased unprecedentedly, making the supply chain unable to meet. Now, the story has changed rapidly, with demand rapidly declining, causing the shipping market to fall into oversupply in both the number of ships and the number of containers. This reflects the risk that the global economy may be falling into a prolonged recession.
Pulling down demand is an important goal of central banks, including the US Federal Reserve (Fed) to fight inflation. However, a re-establishment of the supply-demand balance could also trigger a recession. Several recent surveys of US business CEOs have reflected recession concerns, but the Fed is expected to maintain tight monetary policy. The market currently does not believe that the Fed can control inflation without causing a “hard landing” for the world’s largest economy.
Xeneta data shows that 85% of the company’s customers plan to cut spending on ocean freight in 2023, with 42% saying that the volume of cargo they expect to ship on board will be “fine.” fixed” compared to 2022. Mr. Sand said the data shows that ocean freight volumes will continue to decline.
“Orders are definitely going down. The volume of goods also decreased. Overall vessel usage is down, even as many trains are empty or canceled,” said CEO joe Monaghan of Worldwide Logistics Group.
According to Freightos data, ocean container freight rates from Asia to the US West Coast fell 26% in the most recent week to $1,462/FEU, 90% lower than in the same period last year. Freight rates from Asia to the US East Coast fell 19% in the week to $3,723/FEU, 78% lower than the same period last year. Freight rates from Asia to Northern Europe decreased by 2% in the week, to 3,974 USD/FEU, 73% lower than the same period in 2021.
Lower oil prices are easing pressure on ocean carriers, according to a report from Judah Levine, Freightos’ chief research officer. Levine also emphasized that freight rates from Asia to the US West Coast are currently only 5% lower than in 2019, while rates from Asia to the US East Coast are currently 32% higher than 3 years ago. five.
According to BIMCO data, with the decline in orders, global container freight volume is now down 9.3% year-on-year, leading to overcapacity.
CEO Christian Roeloffs of Container xChange, an online logistics platform, said that the decline in demand will continue to have an effect on freight rates. “In 2023, there is likely to be a price war,” Mr. Roeloffs said.
Source: vneconomy.vn
