Digital Edition

January 2 2023

Issue link:

Contents of this Issue


Page 32 of 131

Januar y 2, 2023 | Journal of Commerce 31 Maritime Asia–Europe spot rate slide puts pressure on contract pricing Asia–North Europe container freight rates in contracts of 30 days or less, contracts of 90 days or more, and long-term contracts signed in the last three months USD per FEU $10,000 $0 $10,000 $5,000 L L Jul Jan 2022 Apr Oct Oct Short-term rates Contract rates signed in last three months Contract rates Contract rates Dec 08, 2022: $7,840.1 Dec 0 Dec 0 Contract rates signed in last three months d in three months Dec 08, 2022: $6,812.4 Short-term rates Dec 08, 2022: $2,342.8 Dec, 2022 $3,030 Source: Xeneta © 2022 S&P Global to sail more slowly and some are scrapped entirely. A new normal: As energy prices soar through the first half and the cost-of- living crisis deepens across Europe, demand will remain subdued through 2023 as consumers tighten their belts. Importers will first need to offload excess inventory that has built up this year before replenishing stocks, and those replenishment volumes are likely to be smaller than usual to support softer seasonal demand. JOC email: twitter: @greg_knowler through planned December with- drawals. By the end of December, a total of 824,000 TEU in capacity will have been cut over the last four months of the year, according to data from Sea- Intelligence Maritime Analysis. To put that number into context, that is roughly equivalent to removing all available capacity on the trade for an entire month. As the eternal battle between supply and demand rages on, carriers are also bracing for the impact of new environmental regulations from the International Maritime Organization (IMO) that will come into effect in early 2023 and will likely absorb some excess tonnage as ships are forced A look back: A year ago, Asia–Europe spot rates were at record highs and capacity was so tight that carriers were charging space guarantee premiums that added thousands of dollars to the already elevated rates. Major hub ports in North Europe were suffering from chronic congestion, effectively cutting available capacity and resulting in shippers placing import orders earlier and in larger volumes. This cargo filled warehouses across Europe, so when the peak season arrived, the tradi - tional uptick in demand after the sum- mer in the run-up to China's Golden Week at the beginning of October was nowhere to be seen. Spot rates that peaked at $14,785 per FEU in the first week of January fell steadily through- out year, dipping below the long-term Asia–North Europe contract rate in August and ending 2022 at just $2,343 per FEU, according to data from rate benchmarking platform Xeneta. A look ahead: Deteriorating mar- ket conditions do not bode well for Asia–Europe volumes and spot rates that enter 2023 close to — or below — pre-pandemic levels. As congestion eases across North European ports, capacity is released into the market, and runaway inflation and a Europe- wide recession begin to constrain consumer goods demand, carriers will find themselves with an oversupply of tonnage. As rates fell through- out 2022, carrier CEOs unveiling extraordinarily positive quarterly results insisted they would aggres- sively match capacity with demand to preserve that profitability. This has resulted in a blank sailings program that's seen double-digit percentage cuts in available capacity on the Asia– North Europe trade from September About face European recession dragging down ocean freight demand, rates By Greg Knowler Flagging consumer spending will likely lead to a protracted drop in European import volumes. The big picture: Shippers on the Asia–Europe trade as 2023 begins find themselves in the exact opposite position they were in at the beginning of 2022, with container vessel capacity outstripping slowing demand and spot rates tumbling. But there is nothing positive behind the drivers of this "improved" shipping environment, as European economies fall into recession and consumers battle a worsening cost-of-living crisis. High inventory levels are proving difficult to pare down as consumer spending wanes, pointing to a drop in European import volumes at least through the first quarter of 2023. 2023 ANNUAL REVIEW & OUTLOOK

Articles in this issue

Links on this page

Archives of this issue

view archives of Digital Edition - January 2 2023