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Trans-Pacific route capacity plummeted in half, demand plummeted, U.S. orders fell 40%!
Dec 07,2022
According to data from the US financial website CNBC Supply Chain Heat Chart, US manufacturing orders in China fell by 40% due to plummeting demand. Carriers have been executing an aggressive capacity management strategy, announcing more air sailing and suspending services to balance supply and demand.
Joe Monaghan, CEO of Worldwide Logistics Group, said: "Due to the sharp drop in demand, container freight rates from Asia continue to decline, forcing shipping companies to cancel more voyages than ever before when ship utilization reaches a new low." U.S. logistics operators are bracing for delays in shipping cargo from China in early January due to container ship cancellations and ocean carrier delays.
"It seems to be a very bad time for the shipping industry. As new ships enter the market, we are facing the twin problems of falling demand and excess capacity," HLS, an Asia-based global shipping company, told customers in a recent consultation on the maritime business environment." HLS analysts predict,In 2023, the volume of cases will further decline by 2.5, while capacity will increase by nearly 5%-6%, which will continue to have a negative impact on freight rates in 2023."Economic uncertainty, geopolitical concerns, and increasingly fierce market competition will further complicate the container shipping market." HLS said.
"OL USA" chief executive Alan Baer said there were some early signs of an inventory correction. As carriers canceled more vessels, overall business volume and orders in Asia continued to be sluggish, and there was little apparent upward momentum ahead of the Lunar New Year. But it said, "space (space) has been tight, although demand is weak, but January and the entire first quarter of the cabin may be at a premium state.On the positive side, inventory depletion and the need to restart orders and delivery cycles appear to be slowly rising.”
US imports from Asia plunged to their lowest level in 20 months in October, trade data cited by HLS showed.prices of container in stock from asia to the us west coast have crossed the break-even point,"Small space for further reduction".
HLS expects most carriers to extend U. S.-West freight rates until December 14, at $1,300-1,400 per 40-foot container (FEU). However, freight rates in the US East are expected to decline by 200 or 300 US dollars in the first half of December to an average of 3,200-3,300 US dollars/FEU.
As a result, shippers believe that the trans-Pacific route has a tight cargo space and reduced service reliability,Carriers, including MSC and Hapag-Lloyd, also do not accept cargo on transit voyages in an effort to make up time.According to the logistics manager, this will cause a delay of two weeks. "The ETA is for information purposes only and is subject to change without notice," MSC said in its latest notice to customers."
The decline in manufacturing orders from the United States and the European Union has also affected Vietnam. According to the report of Vietnam's National Bureau of Statistics, since the beginning of this year,12500 companies fail every month, up 24.8 percent year-on-year. A lack of manufacturing orders in Vietnam, combined with a rise in loan rates from 6.5 percent to 13.2 percent, has led many companies to close factories, according to HLS.Vietnam-bound sea flights canceled in December increased by 50 percent.
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