Ocean freight has shown a significant pullback in consumers, with ocean freight orders fell 20% in September and October. It has affected many products such as industry, some clothing, etc.
The trend towards ocean shipping reflects recent comments from logistics industry executives. Georgia Port Authority executive director Griff Lynch said he expects the number of ships on standby to decline in the coming weeks after seeing historic ship calls. For apparel and footwear, executives say inventory issues are becoming more common, but not a decisive trend. Nike’s excess inventory, revealed in last week’s earnings, has weighed on the stock.
However, the rush towards China’s National Day during Golden Week is not expected, and the company expects demand to level off in October. Continued threats of industrial action across Europe, port congestion in Europe, and weather-related schedule disruptions have further fueled departure cancellations and port omissions, part of the drop in rates from the Asia-Pacific region.
Ocean rates are dropping and ships are being canceled
To keep prices down, shipping companies are conducting so-called tactically canceled voyages, fitting space on ships to order in an attempt to stem price declines. In a note to customers, HSL Logistics said that unless demand picks up ahead of the Chinese New Year at the end of January, shipping cuts could drop by nearly 50% and the decline in shipping capacity could continue into 2023.
It will take some time before the reduction in capacity stops the decline in fares. Prices between Asia and the US West Coast (FBX01 Daily) fell 8% to $2,978/40 equivalent units (FEU), according to Freightos. This rate is 82% lower than the same period last year. Freight rates for the Asia-East Coast US route (FBX03 Daily) dropped 5% to $6,952/FEU, 63% lower than last week’s rates this week.
Another data point that shows a decline in orders is outbound bid rejections. A higher rejection rate indicates tighter capacity. The lower the percentage, the less capacity. “We are currently tracking 2019 levels and are down 80% from a year ago. If you look at spot prices excluding fuel surcharges, they are currently down 31.5% from last year,” said FreightWaves Kevin Hill, lead researcher.
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