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Shipping starting to turn around after two years of snarls

FOLLOWING two years of port congestions and container shortages, disruptions are now easing as Chinese exports remain slow in light of waning demand from Western economies and softer global economic conditions, logistics data show.

Container freight rates, which soared to record prices at the height of the pandemic, have been falling rapidly and container shipments on routes between Asia and the US have also plunged, the statistics show, reports CNBC.

"The retailers and the bigger buyers or shippers are more cautious about the outlook on demand and are ordering less," logistics platform Container xChange CEO Christian Roeloffs said in a recent update.

"On the other hand, the congestion is easing with vessel waiting times reducing, ports operating at less capacity, and the container turnaround times decreasing which ultimately, frees up the capacity in the market."

The latest Drewry composite World Container Index - a key benchmark for container prices - is US$3,689 per 40-foot container. That's 64 per cent lower than the same time last September after falling 32 weeks in a row, Drewry said in a recent update, CNBC reported.

According to Drewry, freight rates on major routes have also fallen. Costs for routes like Shanghai-Rotterdam and Shanghai-New York have fallen by up to 13 per cent.

The falling freight rates tie in with a "sharp drop" in container shipments that Nomura Bank has observed.

Nomura, quoting data from US-based Descartes Datamyne, said container shipments from Asia to the US for all products except rubber products in September are down year on year.

"We assume that the sharp drop in container shipments largely reflects US retailers stopping orders and reducing inventories due to the risk of an economic slowdown," Nomura analyst Masaharu Hirokane said in a note, adding that the bank has yet to see signs of a sharp fall in US retail sales.

Port throughput around the world has also dropped. When Shanghai reopened after its recent lockdowns, port traffic volumes lifted but weren't enough to offset the "wider downturn in port handling levels", Drewry said.

In Europe, sliding container prices and rates reflect declining consumer confidence, Container xChange said.

"The European market is finding itself flooded with 40-foot high-cube containers. As a result, the region is experiencing a fall in the prices of these boxes," Container xChange said.

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Shipping starting to turn around after two years of snarls
Shipping starting to turn around after two years of snarls

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