Global shipping executives are wrestling with plunging exports, falling freight rates and mounting suspense over whether the industry is headed for a price war in a reversal of the soaring demand the industry saw during the pandemic, reports the Wall Street Journal.
Port traffic slumps
Traffic from China’s ports has slowed significantly, empty containers are stacked six high and trucks with no cargo dot the highway leading to the major terminals. The world’s largest box-ship operator plans to return dozens of chartered vessels to their owners.
China’s exports fell nearly 10% in December from a year ago, the third straight month of declines and the biggest drop since Beijing locked down the port city of Wuhan in early 2020. The falling volumes have pushed global ship freight rates into a downward spiral, with the cost of sending a box from China to Los Angeles dropping to $1,238 this week from $15,600 this time last year, according to the Freightos Baltic Index.
Manufacturing activity in China increased in February at the fastest pace in more than a decade and export orders increased for the first time in nearly two years.
Global shipping boomed earlier in the pandemic, when soaring demand for goods led to lines of more than 100 vessels off the Southern California coast. Since then, rising inflation has sapped demand for many products as Americans shifted more spending to food, fuel and services, leaving retailers with a glut of goods.
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Source: The Wall Street Journal
