After two years of port congestion and container shortages, disruptions are easing as China’s exports slow amid slowing demand from Western economies and a weakening global economy, logistics data show.
Container freight rates, which hit record highs at the height of the pandemic, have fallen sharply, and container traffic on routes between Asia and the United States has also collapsed, data shows.
“Retailers and large buyers or shippers are becoming more cautious about their demand outlook and placing fewer orders,” said Christian Roeloffs, CEO of logistics platform Container xChange, in an update Wednesday.
“On the one hand, as vessel wait times decrease, ports operate at lower capacity and container turnaround times decrease, congestion will ease, ultimately freeing up capacity in the market.”
Drewry’s latest Composite World Container Index, the leading benchmark for container prices, is $3,689 per 40ft container. Drewry said in a recent update that after his 32nd straight week of declines, prices have fallen 64% from the same period last September.
The index is now well below its record price of $10,000 during the peak of the pandemic, but remains 160% higher than its pre-pandemic price of $1,420.
Freight rates on major routes have also fallen, Drewry said. Routes such as Shanghai-Rotterdam and Shanghai-New York have reduced costs by up to 13%.
The fall in freight rates is accompanied by a “sudden drop” in container shipping observed by Nomura Bank.
Citing data from US-based Descartes Datamine, Nomura said container shipments from Asia to the US fell year-on-year in September for all products except rubber products.
Nomura analyst Masaharu Hirokane said in a note Wednesday that “the sharp decline in container shipments is largely due to US retailers halting orders and slashing inventories at the risk of an economic slowdown.” he said. Adding that the bank hadn’t seen anything yet.
Signs of sharp decline in US retail sales.
Global port handling is also degraded. Traffic at the port has increased as Shanghai reopened after its recent lockdown, but it wasn’t enough to offset the “widespread decline in throughput levels at the port,” According to Drewry.
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