Volumes have declined steadily in the first weeks of 2023 and world trade continues to stumble as economies grapple with persistent inflation and high energy prices, suppressing consumer demand for goods in nearly every economic sector.Commenting on the release of the latest GSF/MDS Transmodal Container Shipping Market Review, James Hookham, Secretary General of the Global Shippers Forum said:
“This has ceased to be just a supply chain or shipping issue and shippers and carriers are firmly in the hands of global economic forces that are themselves responding to structural weaknesses in economies and geopolitical tensions.” “Predicting volume and inventory requirements for the remainder of the year is a leap into the unknown for many shippers, as few but the most experienced will have encountered such a diverse mix of influencing factors.”
With interest rates still high and central banks hinting they could rise further, the inflationary effects of the Covid crisis and the tightening on consumer spending are continuing into the second quarter of this year.
On the demand side, many carriers and service providers expect demand to recover in the second half of the year, but this is more of a hope than an expectation – there are few economic signs to support that optimism.
The arrival of new shipping capacity, an apparent questioning of the benefits of maritime alliances and an inevitable reduction in the space utilization of ships, is also changing the shape of the supply side of the equation in container shipping .
Freight forwarders have undoubtedly benefited from the dramatic drop in spot rates over the past nine months, with costs on many routes returning to pre-Covid levels. But the sluggish demand for their core products will be more of a concern for shippers than the cost of shipping them. While wary of how quickly demand could recover, as seen in 2020, many shippers are bracing for a rate rebound that may not come for some time.
Shippers also appreciated a marked improvement in the predictability of port calls with the number of scheduled calls actually made by vessels significantly improved compared to the third quarter of 2022. This is the first time since the reviews that began in 2020 that the quality indicators of the service have all been positive, albeit from a low base.
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