Recent data suggests that the global ocean rate market is stabilising. It's a mantra we have heard before in the proceeding months and yet rates stubbornly defied its calls and continued to spiral downwards. So what makes this different??
One factor to consider is the cost margins of carriers. While the exact cost of shipments is closely guarded and unique to each carrier, Drewry has estimated that across Transpacific and Asia to Europe the revenue per effective RV slot is approaching cost. This essentially means that below this level carriers would be shipping effectively below cost.?
A slight rebound in volumes and carrier capacity management programs have also contributed to stabilising rates.?
So if we are truly at or nearing the bottom of the rate market then where does that leave us?
Drewry Shipping Consultants Ltd
estimates a nearly 60% reduction in global freight rates for 2023 compared to 2022. With this figure however, it is critical to bear in mind that it encompasses both spot and long term rates. So annual contracts signed at the peak of rate levels during the pandemic in 2021, that continued through to 2022, are factored into this equation and as such explain such a drastic drop.
Below is a snippet from a rates webinar which we hosted last week. The full session can be viewed here
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Asia?
China?
A shortage of containers is putting upward pressure on rates for shipments out of? ports in northern China.
- 20 foot containers are currently in short supply at ports.
Multiple publications have reported on a shift of production outside of China.
- The Financial Times has stated that although US container imports from China dropped 10% year-on-year, China still dominates the manufacturing market.
- Over the same period imports from India and Thailand to the US rose 5% and 4% respectively.?
- Multinationals such as Apple, Samsung and Adidas have shifted at least a portion of their manufacturing to other hubs, in an apparent move to reduce supply chain risk.?
- It is also apparent that currently,? manufacturing alternatives in South and South East Asia dont have the required infrastructure to support a significant transition from China.?
China’s National Bureau of Statistics has reported that between January and March 2023 throughput of Chinese seaports grew by 5.5%.?
Central China to USA and Europe?
From SHA to Europe and the US, rates have increased since last week.?
- The increase is due to a tightening of space as well as an upcoming Chinese public holiday on the 1st of May.?
- The rate is changing based on the FBA cargo situation.
From NGB to Europe rates have decreased compared with last week while rates to the US have remained stable.?
- Final rate is offered on a case by case basis.
North China to USA and Europe?
From TSN to Europe and the US,? rates have risen this week and continue to fluctuate.?
- We recommend booking 3 -4 days prior to the cargo ready date for shipments to Europe.
- For Europe, the main services on this lane include Air China, Lufthansa and Singapore Airlines. Korean Air and Asiana Airlines can provide freight flights that can offer an earlier estimated time of departure and arrival.?
- For the US,? the main services on this lane include Japan Airlines, All Nippon Airways and Cathay Pacific. Korean Air and Asiana Airlines can provide freight flights that can offer an earlier estimated time of departure and arrival.?
From PEK to Europe and the US, rates have increased as the market has been hot.?
- Space is very limited for the last week of April for shipments to both the US and Europe.?
- Special rates can be applied to heavy dense cargo. Please check on a case-by-case basis.?
From TAO to Europe and the US, rates have decreased this week.
From CKG to Europe have remained stable, while rates to the US have increased slightly since last week.?
South China to USA and Europe?
From? CAN to Europe and the USA,? rates have decreased this week.?
- The increase is due to a tightening of space as well as an upcoming Chinese public holiday on the 1st of May.?
- All shipments will need to be checked with the carrier for rates on a case-by-case basis.?
From SZX? to Europe have remained stable, while rates to the US have increased slightly since last week.?
- All shipments will need to be checked with the carrier for rates on a case-by-case basis.?
From XMN to Europe and the USA,? rates have remained stable this week.?
- All shipments will need to be checked with the carrier for rates on a case-by-case basis.?
North America
USA?
- US inbound containers fell? by 32.2% in March year on year.
- This is the largest recorded drop and has been attributed to the bloated level of imports during the pandemic, weak consumer demand and high inventory levels.
- The Port of Long Beach experienced a 34.7% decline in import volumes in the first quarter 2023.
- Fears over labour strikes at the ports of? Los Angeles and Long Beach are diminishing according to an article by Loadstar.
- With lower dwell times and import volumes, labour issues at the ports are proving to be minor inconveniences as opposed to severe disruptions.?
- The US government's willingness to intervene is also reassuring that major issues in the near future can be avoided.?
Europe
Sweden?
- The Port of Gothenburg has reported a 6% increase in TEUs handled for Q1, when compared with 2022.
- This is despite the fact that import volumes fell by nearly 20 percent and this increase has been attributed to strong demand for Swedish exports.?
- Over half of Sweden's container transport is handled at the quays of the Port of Gothenburg.
Germany?
- Doubts have been casted over plans for the sale of parts of the Port of Hamburg terminal to China.?
- This comes as pressure from the German government mounts about concerns about undue Chinese influence.
- Initially, Chinese state company Cosco was to buy a minority stake in the Tollerort terminal.
- However, the German government contends the terminal counts as “critical infrastructure” and therefore no more than 10% can be sold.?
UK?
- Supply chain disruptions cost UK businesses ￡12 millions pounds annually.
- A new study from TMX Global has revealed the extent of lost revenue due to disruptions in UK supply chains.
- Some of the disruptions highlighted are strikes such as those which occurred last year at the port of Liverpool, as well as issues caused by Brexit.?
- Those in the Haulage industry have raised concerns over the Windsor framework.
- Many haulage operators especially in Northern Ireland are seeking more clarity on the framework and how the green and red lanes will work.?
- Mark Tait, Managing Director of Target Transport has told a parliamentary committee “as far as haulage is concerned, there is no green lane between GB and Northern Ireland… the only green lane is actually between the EU and Northern Ireland via the Republic”.
