Trade Analysis: Far East Eastbound
There is currently enough space available in Asia and there are no issues with capacity. Current rates are still remarkably low and seem to have hit the lowest possible level.read more
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The beginning of the year performed very poorly, with global container volumes down by 7.5% in the first two months of 2023 compared to 2022. A positive surprise came in March, when China’s exports increased by 15% year-on-year.
After this rather strong increase in March and April, global trade once again showed signs of flattening out in May. Demand pressures are expected to continue. There have been promising signals from certain industries, but the expected normalization and several predicted volume trends have not yet materialized.
According to analysts, the indicators of major economies are also trending sideways, although the EU and US might see an increase in imports. Reefer volumes continue to outperform dry containers, with global volumes up by 5% compared to last year.
Last updated on May 30
Global bottlenecks have been reduced and are more or less at pre-COVID19 levels. The trend is positive and only 7% of all goods shipped worldwide are currently stuck, compared to nearly 14% at the peak of these bottlenecks in the past.
These noticeable improvements are also reflected in global carrier schedule reliability, which is steadily increasing and is currently at 60.2%, close to pre-pandemic levels.
Year-on-year, global schedule reliability has increased by 26% and the average delay for late arrivals has decreased to five days.
We have seen an extreme downward trend in in the first quarter of 2023, with rates collapsing and bottoming out on most trades. The Drewry World Container Index (WCI) has recently shown signs that certain markets may have bottomed out and are slowly beginning to recover on major head-haul trades such as the Transpacific Eastbound route.
As a result, the average operating margin for the major carriers fell from 33.3% to 13.1% in Q1. Measures have been taken, including a strict blank sailing program, and up to 25% of the massive order books will likely be postponed.
Fleet capacity is expected to increase significantly in the coming years. Current order books represent close to 30% of the world’s existing fleet, and analysts are forecasting a year-on-year fleet growth of 7% in 2023 and 2024.
Another significant development comes from the top two leading container shipping lines – MSC and Maersk have announced that their 2M alliance will end in early 2025. In addition, MSC became the world’s biggest carrier in 2022.
Considering the three biggest global alliances (2M, Ocean Alliance and THE Alliance) and the fact that the world’s top nine carriers control 83% of global capacity, future developments in the shipping industry are sure to remain interesting.
The shipping industry will remain volatile and uncertainties will continue to plague the market.
Legend: traffic lights showing current status, arrow indicates possible development of transport rates.