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After the Spring Festival, shipping companies will cancel half of the flights from Asia!
Dec 19,2022
Against the backdrop of extremely weak demand forecasts, shipping companies are preparing to cancel about half of their scheduled voyages from Asia to northern Europe and the United States after the Chinese New Year on January 22.
High inventories in Europe and the United States, coupled with uncertainty about future consumer demand, have caused orders to be canceled or delayed, so that Chinese factories may have a holiday ahead of the Spring Festival. Apparel maker Inditex, for example, said on its earnings call this week that its inventory levels rose 27 percent on October 31 and 15 percent on December 8. It said there was no order plan for next year.
Maersk said in its latest North American market news that this year"More shippers choose to wait until the end of the holiday season to place orders, because the inventory shipped in early 2022 is already able to meet demand ".
Meanwhile, this week after weeks of double-digit declinesThe container in stock market freight index has leveled off, indicating that it may have bottomed out. On the trans-Pacific route, for example, the Asia-West America Freight Index was little changed this week, and Xeneta's XSI Index has an average rate of $1496/FEU. For the US East, Druri's World Container Freight Index WCI fell only slightly by 1% to $3952/FEU.
In fact, ONE CEO Jeremy Nixon said during his monthly media briefing at the Port of Los Angeles this week that he expectsShort-term rates to remain flat through 2023and added:"I think in stock market rates have bottomed out." But he warned,Asian exports will fall sharply after the Spring Festival holiday, and exports will be very weak in February and March. "It can only be seen whether demand will start to pick up around April and May."Overall, U.S. imports will be sluggish in the first half of next year, and may not gradually return to normal until the second half of 2023.
On the Asia-to-Northern Europe trade route, spot rates for the major indices this week ranged from $2167/FEU for the Baltic FBX to $1674/FEU for the Deluli WCI.
However, according to Loadstar reports,before the spring festival, the shipping space for the nordic route will become increasingly tight.With both shippers and shipping lines reluctant to commit in uncertain market conditions, many of the route's annual contract negotiations (usually finalized in December or January) appear to have stalled.
Spot rates from Asia to Mediterranean ports also remained stable this week, with Deluli's WCI index unchanged at $2909/FEU, for example.
But transatlantic routes remain the exception, with short-term freight rates from northern Europe to the East of the United States still at least three times higher than before the outbreak. In fact, the Nordic to Eastern XSI even rose slightly to $7189 per 40 feet this week.
Due to the strength of the US dollar against the euro and the British pound, and the increased attention to sourcing products from Europe, trade on this route has remained strong despite the economic downturn in other regions. However, according to data from the maritime advisory agency Sea-Intelligence,Freight rates on the transatlantic route will drop significantly due to a significant 43% YoY increase in capacity on the transatlantic route.Analysts at Sea-Intelligence said:"Spot rates on both sides of the Atlantic are likely to collapse in the coming months."
Stop the flight! Continued capacity reduction
According to the latest data from Deluri, of a total of 721 scheduled voyages on major trade routes across the Pacific, Atlantic and Asia to Northern Europe and the Mediterranean, between the 51st week (December 19-25) and the 3rd week (January 16-22)100 voyages were canceled, with a cancellation rate of 14%.
During this period,Fifty-three per cent of air traffic takes place on the eastbound trans-Pacific route, 24 per cent on the Asia to Northern Europe and the Mediterranean route and 23 per cent on the westbound trans-Atlantic trade route.In the next five weeks, THE Alliance has announced the cancellation of up to 47 voyages, followed by Ocean Alliance and 2M Alliance with 16 voyages and seven voyages respectively. During the same period, the Non-Shipping Union implemented 30 blank voyages.
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