After two years of ship snarling, things are starting to turn around

After two years of ship snarling, things are starting to turn around

Container shipping rates, which soared to record prices at the height of the pandemic, have fallen rapidly, and container shipments on routes between Asia and the US have also fallen, logistics data show.

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After two years of port congestion and container shortages, the disruption is now easing as Chinese exports slow in light of weakening demand from Western economies and softer global economic conditions, logistics data show.

Container shipping rates, which soared to record prices at the height of the pandemic, have fallen rapidly, and container shipments on routes between Asia and the US have also fallen, data showed.

“Retailers and larger buyers or shippers are more cautious about their demand outlook and are ordering less,” Christian Roeloffs, CEO of logistics platform Container xChange, said in an update on Wednesday.

“On the other hand, congestion is easing as vessel waiting times are reduced, ports operate at lower capacity and container turnaround times are reduced, ultimately freeing up capacity in the market.”

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The latest composite Drewry World Container Index – the key benchmark for container prices – is $3,689 per 40-foot container. That’s down 64% from the same time last September after falling for 32 straight weeks, Drewry said in a recent update.

The current index is well below the record high prices of over $10,000 during the peak of the pandemic, but still remains 160% higher than pre-pandemic rates of $1,420.

According to Drewry, freight rates on major routes have also dropped. Costs on routes such as Shanghai-Rotterdam and Shanghai-New York have fallen by up to 13%.

The falling shipping rates are related to the “sharp decline” in container shipments observed by Nomura Bank.

Citing data from US-based Descartes Datamyne, Nomura said container shipments from Asia to the US for all products except rubber fell year-on-year in September.

“We believe the sharp decline in container shipments largely reflects U.S. traders halting orders and reducing inventories due to the risk of an economic slowdown,” Nomura analyst Masaharu Hirokane said on Wednesday, adding that the bank had yet to see signs of that. sharp decline in US retail sales.

Worldwide port throughput has also declined. When Shanghai reopened after the recent lockdowns, port traffic volumes picked up, but not enough to offset the “broader decline in port handling levels,” Drewry said.

What’s different now?

In Europe, moving container prices and rates reflect declining consumer confidence, Container xChange said.

“The European market is flooded with 40-foot high-cube containers. As a result, the region is experiencing a drop in prices for these boxes,” Container xChange said.

Trends in logistics and supply chains from the past two years have reversed, logistics companies said. During this period, container shortages were constant due to delays at ports affected by the lockdown and surging demand.

In Europe, moving container prices and rates reflect declining consumer confidence, Container xChange said.

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But now demand for containers is falling and so are their prices, Seacube Containers chief commercial officer Danny den Boer said at the Digital Container Summit earlier this month.

Container idle time is also rising, Soges CEO Andrea Monti said at the same conference.

“Containers are piling up at many import-controlled ports. Shippers are giving away containers just because containers are stuck there,” Container xChange account manager Gregoire van Strydonck told the conference.

India’s Arcon Containers CEO Supal Shah said factories in China have stopped production for the foreseeable future.

“We heard four months,” he said at the Digital Container Summit.

“Container warehouse space is full in China, Europe, India, Singapore and most parts of the world.”

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