Rates falling but planes, trains and shipping lanes face issues

Date Added: 29 November 2022

Rates falling but planes, trains and shipping lanes face issues

Davies Turner, with our broad range of multimodal freight forwarding and logistics services designed to manage international supply chains, notes reports in the trade media that as operators get a handle on capacity issues that have troubled supply chains over the past two years, other issues are still proving problematic.

Shipping rates are continuing to fall after recent record prices and profits, with ocean carriers offering “crazy” rates in the face of a looming recession, despite cutting capacity by up to a third on some routes.

Forwarders are being bombarded with low rates from agents and carriers as they seek out volume, with rates from China into North Europe falling.

According to the Loadstar website, Drewry’s WCI recorded a 14% decline, to USD2,687 per 40ft, for North Europe, but forwarders are being offered rates of USD1,800 as carriers “panic”.

Daily ocean container departures from China are down by 22% year-on-year, according to data in FreightWaves SONAR Container Atlas, despite a recovery for Chinese Golden Week in October.

Weak demand globally and continued lockdowns in China have affected economic activity.

Cancelled sailings have slowed, but have not stopped the drop in rates, which will continue to dip next year before a recovery in 2024, reports Tradewinds.

Weaker volumes and higher capacity will also result in overcapacity in air cargo next year, according to data analyst Xeneta, which says that lower ocean costs and better reliability as port congestion decreases and capacity improves may tempt some shippers to swap modes.

Shippers who opted for air last year to avoid ocean delays have now shifted back to ocean as container rates and transit times fall.

Supply Chain Dive reports that air freight demand fell for the eighth consecutive month in October, with volumes down 8% on the year in October. Spot rates fell 20% in October, but are still 94% higher than in 2019.

Freightwaves reports cargo volumes at Cathay Pacific in October continued to contract due to China Covid policies and a failure of the traditional autumn surge in activity ahead of the holidays.

For more information about Davies Turner's multimodal freight and logistics services, please contact your local office which can be found here: https://www.daviesturner.com/contact-us.


 

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