Our latest freight market report provides multi-modal situation updates and insights, together with carrier updates, that will provide you with critical insights for the weeks ahead.
The container shipping lines have implemented significant capacity reductions in response to reduced demand. Despite their efforts, many commentators believe that the lines have not been bold enough, particularly in light of the record-breaking new vessel volumes due for delivery over the next two years, which could create structural overcapacity.
The air freight market benefited from massive modal-shift volumes over the last two years, as ocean carriers struggled to maintain schedule integrity in the face of endemic disruption, but those shippers are moving back to ocean as congestion eases and reliability improves.
OCEAN
The westbound trade from Asia remains under pressure with the market softening and the lines’ blank sailing program expected to be continued. Disruption in recent months has been exacerbated by typhoons in Asia, China’s zero-COVID policy, port congestion in Europe and ongoing labour disputes.
Europe’s consumers and businesses have been hit harder than those in the US, by Russia’s continuing war with Ukraine and the resulting surge in energy costs, that have fed into high inflation and declining consumer confidence.
The global macroeconomic situation has prompted analysts to slash forecasts for shipping lines in response to the accelerating timeframe for a return to pre-pandemic freight rates.
Rather than mid-2023, it is now forecast that shipping lines will be back to the old/new normal with shippers squeezing shipowners for the best deals as soon as the end of this year. No more dizzying profits for the lines, as the pandemic bonanza is definitely behind us.
Despite the sharp increase in voyage cancellations, shippers appear to be having little difficulty getting space on first-available departures, which is reviving the concept of ‘just-in-time’ supply chains.
Carriers are hoping the early Chinese New Year in 2023, which falls on the 22nd January, will boost demand in late November and December, but until then they will are likely to remove more capacity, either by more blanking or by the temporary suspension of services.
Asia-Europe head-haul spot rates have been under intense pressure slumping 13%, in one week, on the North Europe component, while rates into the Mediterranean trade fell 9%.
Container spot and short-term freight rates from China to the US also remains under pressure, as sluggish demand has led carriers to take out more capacity.
Transatlantic demand remains high, as do rates (comparatively) and despite the container shipping lines’ efforts to recover vessel transits times, schedule integrity remains low with extended waiting times in Europe and the US, which are still leading to recovery-led blank sailings.
AIR
Transatlantic volumes remain comparatively stronger, amidst global volume drop and the build up to the traditional peak season, that usually sees a sharp increase in demand and rates from Asia between September and October, has not materialised, ending any (slim) hopes of a recovery, to Europe or the US.
Rates on both lanes are down year on year; 14% to Europe and almost a third to the US. However, it should also be noted that rates on both routes remain ahead of 2019 pre-COVID levels.
Air cargo volumes declined 8% year on year in October – the eighth consecutive month of decline – and the outlook is uncertain, with nothing to indicate an upturn next year and no indication there will be a uptick, during the traditional Christmas peak weeks. The drop in demand (in chargeable weight) is 3% below the pre-pandemic level in 2019.
Further price declines are likely, as the market outlook remains weak, due to inflation slowing consumer spending and belly-hold cargo capacity increasing as passenger flights recommence.
The air freight market benefited from massive modal-shift volumes over the last two years, as ocean carriers struggled to maintain schedule integrity in the face of endemic disruption, but those shippers are moving back to ocean as congestion eases and reliability improves.
The outlook for air cargo remains uncertain, with no real pressure on capacity and rate increases unlikely, as congestion easing on ocean freight removes a channel for air freight growth.
Heathrow ground handlers at dnata and Menzies will take part in three days of strike action later this month over a pay dispute.
Ground-handling bottlenecks could impact effective capacity and create upward pressure on rates and operations on the ground may be problematic, if airlines and cargo handling companies struggle to hire people and remain short-staffed, or if the Heathrow ground handlers dispute at dnata and Menzies continues past this month’s strike action.
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