Image © Port of Los Angeles
Easing provide chain bottlenecks at main U.S. ports could also be excellent news for customers, however not a lot for containership operators. As we reported earlier, after container transport big Maersk reporting document third quarter outcomes, CEO Søren Skou cautioned that “freight rates have peaked and started to normalize during the quarter, driven by both decreasing demand and easing of supply chain congestion. As anticipated all year, earnings in Ocean will come down in the coming periods.”
Now, Niels Rasmussen, chief transport analyst at BIMCO, sees the liner transport panorama dealing with adjustments, with “numerous” ships heading for lay up.
Rasmussen cites information from Container Trade Statistics that present that, in September 2022, head-haul and regional export volumes had been down 9.3% year-on-year. Head-haul trades fell 15.5% whereas regional trades had been down 0.7%. At the identical time, volumes had been 0.2% decrease than in September 2019. The quantity decline represented the primary month since June 2020 to see decrease volumes in contrast with the identical month in 2019 and may very well be a warning that laid up ships and additional freight fee reductions are on the horizon.
A head-haul commerce is the route of an interregional commerce with the best quantity, equivalent to Far East to North America. A regional commerce is an intraregional commerce, equivalent to inside Asia.
“In September 2022, head-haul and regional trade volumes were lower than in 2021 into all import regions except the Far East. Remarkably, volumes into North America, which led the surge in volumes during COVID, saw the greatest loss at -20.6% year-on-year,” says Rasmussen.
For container transport the head-haul and regional commerce volumes are the important thing drivers of ship demand and profitability. A head-haul commerce is the route of an interregional commerce with the best quantity, equivalent to Far East to North America. A regional commerce is an intraregional commerce equivalent to inside Asia. During 2021 and 2022 the head-haul and regional trades have additionally been the drivers of port congestion, which additional elevated ship demand and tightened the provision/demand stability in favor of the liner operators.
Transpacific eastbound volumes fell 24.5% year-on-year and contributed with simply shy of fifty% of the full drop in head-haul and regional volumes vs. 2021. In 2021, September volumes had been up 27.4% on 2019 however are actually 3.8% decrease.
DECLINING VOLUMES, GROWING FLEET
In whole, volumes in September had been 1.1 million TEU decrease than a yr in the past and 20 out of 28 region-to-region trades confirmed damaging development. At the identical time, 13 trades recorded decrease volumes than in September 2019. Out of the highest 10 region-to-region trades which cowl almost 90% of all volumes, the trades into Europe are unsurprisingly doing the worst in comparison with 2019. The Far East-Europe commerce was down 18.8% whereas the Intra Europe commerce declined 11.5%.
The abrupt slowdown in volumes to North America and Europe comes after 9-12 months of the quickest enhance on document in enterprise inventories in each the U.S. and the EU. It is subsequently seemingly, says Rasmussen, that the decrease volumes mirror a necessity for companies to each trim inventories and alter ongoing imports to anticipated decrease gross sales as extended excessive inflation is taking a toll on customers and companies.
“No matter the reason for the low volumes, at this level of volumes, the remaining congestion that has helped to prop-up the supply/demand balance should dissipate quickly. The liner operators will then be left with lower volumes than in 2019, a fleet that has grown 11.8% since then, an orderbook set to add 9.9% to the fleet in 2023, and poor prospects for the global economy. EEXI and CII regulations may absorb as much as 10% of the fleet in 2023, but unless the markets surprise positively, we must still expect to see numerous laid up ships or freight rates that continue to move quickly downwards, or both,” says Rasmussen.
