As Germany enters a recession, there will likely be a decrease in the demand for goods during the upcoming peak season, contributing to a slowdown in global trade. The anticipated decline in consumer spending in the coming months will negatively affect the demand for peak-season goods from Europe, as reported by Xinde Marine.
Ongoing recession
Christian Roeloffs, the CEO of Container xChange, predicts that the ongoing recession in Germany will lead to a decline in economic activity due to reduced consumer demand for goods and services. This, in turn, will impact the peak season demand for this year. The drop in consumer demand and economic activity in Europe can also result in decreased imports, affecting export-dependent economies and potentially causing a slowdown in global trade, contributing to a broader economic downturn.
Additionally, Europe and the UK have experienced labour strikes in various countries such as France, Portugal, Greece, Germany, and the Netherlands. These strikes have caused disruptions at ports, significantly affecting the smooth flow of cargo movements. Such disruptions lead to delays, increased costs, and logistical challenges for businesses relying on efficient supply chains. Roeloffs emphasizes the interconnectedness of different economic sectors and highlights the importance of stable labour relations for sustained economic growth.
These labour strikes and the resulting disruptions can be observed in the declining port throughput in Hamburg, Rotterdam, and Antwerp, reflecting the already reduced demand.
Labour demands and inflation
The ports of Rotterdam, Antwerp, and Hamburg experienced declines in throughput during the first quarter of 2023. Rotterdam saw an 11.6% drop in container volume, primarily due to the elimination of volumes to and from Russia. Antwerp-Bruges witnessed a 5.7% decrease, with a significant decline in Russia-related cargo. The decline in Asian imports (-14.2% in TEUs) at the port of Rotterdam reflects stock accumulation and a drop in demand driven by inflation. Christian Roeloffs, CEO of Container xChange, expects the recession to further impact labour demands and inflation, worsening the decline in consumer demand and negatively affecting retail inventory refilling throughout Europe. These factors are likely to harm exports from Asia as well.
Container Availability in Europe
In 2021, European ports experienced a cyclic rise in cargo-filled containers from March to May as retailers heavily restocked in preparation for the peak season. However, this trend did not occur in 2022 and 2023, indicating flat inventory replenishment during those months. Several factors could explain this, including the invasion of Russia on Ukraine, rising inflation, and recessionary behaviours by retailers and consumers. These factors have contributed to slower trade and various other effects, impacting the overall economic situation and trade patterns in Europe.
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Source: Xinde Marine
