Spot Rates Reach Rock Bottom, China Takes Charge of Recovery in Asia, and Cautious Optimism for Spring's Return to Normal
Greetings everyone,
Volatility and uncertainty are still high, but forecasts for 2023 are now looking less pessimistic than in the past few months. Ocean freight rates have returned to pre-pandemic levels, port congestion has dropped off, and Asia-pacific continues to lead in growth.?
Although prices are still high and spot rates are at rock bottom, positive trends such as economic recovery and return to sustainability goals are starting to appear on the horizon. We will have to see if the optimistic dreams for 2023 come true. Let’s get into what happened this past month.?
Finally?some positive trends
Headline inflation is declining and consumer confidence is slowly rising back up to prepandemic levels.?Europe is doing better than expected.
However, we are still seeing high prices in much of the world. China’s reopening will cause energy prices to rise as well.??
Rates wars among shippers
February is typically a low point for freight rates, and this past month has been no exception. This past month, spot rates fell faster than we’ve seen in the past 6.5 years. The uber-low spot rates have spurred many shippers to shop for the lowest price.?
In spite of the spot rates bottoming out, contract rates are not as low for 2023, indicating hope for a?return to normal?soon.?
What’s happening in China?
?The sudden rebound in trade and tourism caused by China’s recent opening is already acting as a major catalyst for economic recovery in the entire APAC region.
Growth in the region has risen to 4.2 this year,?up from 3.8 % in 2022.?China and India are expected to contribute to a whopping half of global economic growth this year, with the rest of Asia contributing another ?.
As things calm down, interest in sustainable logistics renews
Companies that put the brakes on sustainability initiatives while in survival mode during much of the past few years are returning to greener goals now.
While the Paris agreement aims for net zero emissions by 2050, many retailers are taking the initiative to speed up that timeline. Some companies have chosen to stick to their sustainability guns by teaming up with internationally recognized communities that strive for more agile supply chains in tandem with greener logistics practices.?
For instance: this past month,?Puma joined the Zero100 Initiative,?a group committed to reducing carbon emissions in supply chains?through digitization. Hopefully, we will continue to see companies renewing and re-upping sustainability goals throughout the rest of 2023.
Intermodal rises again
Between threats of railroad strikes to the global container shortage during Covid, intermodal freight has certainly had a rocky history.?
However, thanks to the construction of more facilities and the adoption of new technology, it looks like things are starting to look up for the industry. Experts are even predicting that the global intermodal freight market will grow?CAGR 6.38% from 2022 to 2026.?
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Canadian rail company CN provided one such bright light to lead intermodal forward this month, teaming up with Google Cloud for a project to modernize the railway system by?building its technology infrastructure on the cloud.
News and Acquisitions
Speaking of initiatives leading intermodal forward, this past month saw logistics software company WiseTech Global?acquire Blume Global at USD 4.14 million. Blume is one of the top managers of intermodal in the USA, managing containers and chassis for 6 out of the 7 class-one railroads in the states.?
WiseTech is expecting that the acquisition will be an important piece for integrating rail freight into their North American logistics offerings, and they expect that Blume's high growth rate will mean breaking even on the purchase by as early as 2024.
From CBIP - The Content Wall!
We’ve published the following blogs this last month. Give them a read if you have a couple of minutes.
How VR and AR are Revolutionizing E-Commerce Logistics
Looking to level up your logistics game? Find out how virtual reality can optimize your operations...
From China to Vietnam: The Rise of FBA Sellers' Sourcing Strategy
Uncovering the Surprising Reasons Why FBA Sellers Prefer Vietnam to China for Manufacturing...
A Beginner’s Guide to TMS
Check out our guide on TMS software and its many functions. The processes of supply chain and logistics are notoriously hard to track.
Want daily updates from CBIP? Make sure to follow me via twitter (@Nbartlett_CBIP) and CBIP (@CBIPLogistics) for thoughts and conversations on the industry every week.
Until next month,
-Nick Bartlett
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