- Freight rates have continued to descend as liners attempt to maintain healthy vessel utilization in a slowing market to sustain market share.
- Platts, part of S&P Global Commodity Insights, assessed the key Far East-US Pacific Coast trade route at $2,000/FEU Oct. 10, down 52.3% on the month and at the lowest value since May 29, 2020.
- “Right now, our focus is: let’s make sure we’re not bringing in more than our inventory levels require,” a US-based importer said.
According to marine consultancy Hackett Associates, as weaker demand lowers freight prices, North American container imports are anticipated to fall to their lowest level since early 2021.
Twenty-foot equivalent unit imports are up a healthy 3.6% in the first eight months of 2022, but according to Hackett’s prediction, that number will plummet by 2.9 in the second half and 9.6% in the first quarter of 2023 as reported by S&P Global.
Dropping demand
Ben Hackett, a partner at Hackett Associates, claimed that “the boom in US import volume has run out of steam, notably for cargo from Asia.” “The dropping demand is requiring large reductions in the ship capacity that carriers are offering, and the historically anticipated increase in shipments during the peak season has not materialised, adding to the carriers’ troubles.”
As liners try to maintain healthy vessel utilisation in a weakening market to maintain market share, freight prices have continued to decline.
Trade routes at the lowest
The important Far East-US Pacific Coast trade route was valued at $2,000/FEU on October 10, down 52.3% from the previous month and at its lowest level since May 29, 2020, according to Platts, a division of S&P Global Commodity Insights.
Rates on the North Asia to West Coast North America route covered by Platts Container Rate 13 are expected to continue down through the fourth quarter and into the new year before levelling off in February, according to S&P Global. Rates from North Asia to the US West Coast are anticipated to drop by an average of 9% per month from October to January, reaching a low of $1,500/FEU in January before rising to an average of $1,650/FEU in Q2 2023.
USEC ports show strength
When aggregate loaded import volumes declined 8.7% month over month to 1.21 million TEU in August, US ports on the Atlantic Coast performed better than those on the Pacific Coast. 106,000 TEU more were imported through US East Coast ports during the time, an increase of 9.9% over the previous year.
A US-based importer stated, “Right now, our objective is: let’s make sure we’re not taking in more than our inventory levels demand.” “The industry will likely experience lower volume levels overall, but not by nearly the same amounts as they did when the pandemic struck.”
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Source: S&P Global
