Market Weakness Observed Globally


The global supply chain continues to be plagued with severe congestion says Baltic Exchange.

  • The newest data from May from Sea-Intelligence shows no strong improvement in global reliability as the timeliness of vessels is still lower than at some point time last year.
  • The reliability remains below 40% for the 14th consecutive month. There has been a slight improvement in the duration of vessel delays.


The delays have been brought back to the same as last year. All in all, this means that 10% of the global vessel capacity remains effectively unavailable to the market. This is an improvement from almost 14% in January 2022.  The spring period is the seasonal low point of container demand. As an example, only 22% of the Asia-Europe annual volumes are loaded in the 1st quarter of the year, and for the Asia-North America trade, it is 20% based on the pre-Covid seasonality. Yet despite the seasonally lower volumes, the operational improvements in the supply chain have only reduced the problems to the same level as in 2021. Even a modest peak season has the potential to worsen congestions, which will remove capacity and send freight rates spiralling.

Post Pandemic

There was an expectation that the Shanghai re-opening would lead to a significant boom in demand. Unfortunately, demand data tends to be lagged in time. But, the spot rate development gives a more up-to-date view of the developments. Until mid-June, it could be shown that the spot-rate decline in the Asia-North Europe trade was following normal seasonality. On the Transpacific, the rates to USEC took a level shift down, but this was more likely due to the effects of shifting cargo. This was between the East Coast and West Coast and is driven by fears of port congestion effects. 


The last few weeks of June saw spot rate levels deteriorate further, at this time it should have increased. Additionally, the weekly data from Flexport shows that even though the transportation time for cargo from Asia to Europe and North America is improving, the supply chain still suffers from delays. This is in comparison to the period before the pandemic.  Even if demand is weak the risk remains that bottleneck problems will further reduce the available capacity. This has recently been seen in port strikes in Germany, rail strikes in the United Kingdom or Truck strikes in S. Korea. 

In conclusion, shippers who are now facing a situation where spot rates are dipping below contract rates would be wise not to break or initiate renegotiations of those contracts just yet – additional capacity constraints might still lead to spot increases in the coming months. 

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Source: Baltic Exchange


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