According to the latest data from the CNBC Supply Chain Heat Map, a US financial website, US manufacturing orders in China fell by 40% due to plummeting demand.
Carriers have been executing active capacity management strategies, announcing more blank sailings and service suspensions to balance supply and demand.
Joe Monaghan, CEO of Worldwide Logistics Group, said: “Container freight rates from Asia continue to fall as demand plummets, forcing shipping lines to cancel more sailings than ever before as vessel utilization reaches new lows.”
U.S. logistics operators are bracing for delays in shipping cargo from China in early January due to container ship cancellations and ocean carrier delays.
Total container freight volume from China to the United States fell 21%
Joe Monaghan also pointed out that due to reduced orders, factories in China are expected to shut down two weeks earlier than usual during the Chinese New Year. January 21st is Chinese New Year. The seven days following the holiday are considered a national holiday. “Many manufacturers will have holidays in early January.”
Project44, a U.S. supply chain digital services company, said that after reaching record trade levels during the epidemic lockdown, TEU (twenty-foot standard container) shipments from China to the United States have fallen significantly since the late summer of 2022, including from August to Total container volumes fell by 21% during November.
Global shipping company HLS, headquartered in Asia, issued a warning to customers in a recent communication about the maritime business environment.
“This appears to be a very bad time for the shipping industry. As new ships enter the market, we have the dual problem of falling demand and excess capacity.” HLS analysts predict a further 2.5% decline in container volumes in 2023 , while capacity will increase by nearly 5%-6%, which will continue to have a negative impact on freight rates in 2023.
“Economic uncertainty, geopolitical concerns, and increasingly fierce market competition will further complicate the container shipping market.” HLS said.
U.S. West Coast ports hardest hit
Trade data cited by HLS showed that U.S. imports from Asia plummeted to the lowest level in 20 months in October.
Spot prices for containers from Asia to the U.S. West Coast have passed the break-even point, with “little room for further reductions.”
Project44 Vice President Josh Brazil said the large West Coast ports of Los Angeles and Long Beach experienced the largest declines in trade as shippers moved some of their cargo to the East Coast to avoid the risk of major union strikes at West Coast ports.
HLS expects most carriers to extend US-Western freight rates until December 14, keeping them at $1,300-1,400 per 40-foot container (FEU). However, freight rates in the US East are expected to drop by US$200 or US$300 in the first half of December to an average of US$3,200-3,300/FEU.
Blank (cancelled) sailing data shows that vessel capacity on the trans-Pacific route (China to the United States) continues to decline significantly.
Maersk and MSC’s 2M alliance has suspended nearly half of its U.S. West Coast services in December. The Ocean Alliance (CMA CGM, COSCO Shipping Lines, OOCL and Evergreen) and THE Alliance (Ocean Network Express, Hapag-Lloyd, HMM and Yang Ming Line) have cut overall ship capacity by 40-50% until the Lunar New Year.
As a result, shippers see tight cargo space on the trans-Pacific route and reduced service reliability, with carriers including MSC and Hapag-Lloyd also not accepting cargo on transfer voyages in an effort to make up time.
According to the logistics manager, this will cause a delay of two weeks. MSC said in its latest notice to customers that “ETA is for reference only and is subject to change without prior notice.”
U.S. imports from Europe increase
Unlike the drop in orders to China, trade data analyzed by Project44 shows that the Europe-to-U.S. trade route is “probably one of the most surprising and certainly the most important developments since the beginning of 2020.” Josh Brazil said.
“This sharp rise cannot be explained by the epidemic alone. But the strategic shift away from over-reliance on trade with China and geopolitical tensions with Russia are the main drivers of the EU-US trade boom,” he said.
The global trade map is rapidly being redrawn, with EU-U.S. trade and investment under intense scrutiny as the West’s economic relationship with China comes under intense scrutiny.Rising dramatically. This year, the United States imported more goods from Europe than China, a big shift from the 2010s, according to Project 44.
“For their part, European manufacturers battling sky-high energy prices and inflation are increasingly exporting and investing in the United States,” Josh Brazil noted.
According to data from Project 44, German exports to the United States increased by nearly 50% year-on-year in September. In a year-on-year comparison in the first nine months of 2022, Germany’s mechanical engineering industry’s exports to the United States increased by nearly 20%.
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