Global Freight shows signs of bottoming out Ship’s crew

Reuters

By John Kemp

LONDON, April 27 (Reuters) – Global freight volumes fell at some of the fastest rates in three decades earlier this year but showed signs of bottoming out at the end of the first quarter.

According to the Dutch Bureau of Economic Policy Analysis (“World Trade Monitor”, CPB, April 25), volumes between December and February fell by -2.1% compared to the same period last year.

The rate of decline has been in the 8th percentile for all overlapping three-month periods since 1992; Volumes have only fallen this fast during the last three recessions of 2020, 2008/09 and 2001/02.

Amid the global slowdown, the US rail network carried 1.06 million containers in February, the lowest for the season since 2015 and ahead of 2012, data from the Association of American Railroads shows.

Global freight has been hit by excess inventories across the supply chain as consumer and business spending has returned from goods to services in the wake of the pandemic.

Persistent inflation, rising interest rates and heightened fears of an impending recession have also prompted households and businesses to be more cautious about their spending.

However, the most recent data, although covering only a small number of transport hubs, shows that freight volumes may have stabilized or improved by the end of the first quarter.

Container throughput at the Port of Singapore climbed to a record high of 3.34 million TEUs (twenty-foot equivalent units) in March.

In China, cargo movements rose to a seasonal record of 2,022 billion tonne-kilometres in March as the industry resumed production following disruptions caused by lockdowns and the pandemic’s output wave.

At London’s Heathrow Airport, freight fell more than 9% in March compared to the same month last year, but volumes have stabilized since the fourth quarter.

In the United States, the number of shipping containers handled through the nine largest ports fell 22% year-on-year in March, but was broadly in line with the pre-pandemic average for 2015-2019.

The cost of containerized shipping has risen slightly in recent weeks after a year of almost continuous declines, according to the Freightos Baltic Exchange global container index.

Outside of China, industrial activity is on the cusp between a mid-cycle slowdown (from which it would pick up again) and an end-of-cycle recession (with weakness feeding on itself).

China’s post-pandemic reopening is giving some impetus to other economies and companies have started to clear their excess inventories, with the inventory cycle expected to complete in the third quarter.

Lower energy prices are also a stimulus as oil and gas costs are significantly lower than they were at this time a year ago, easing some of the pressure on businesses and consumers.

On the other hand, manufacturers and retailers are facing increasing headwinds from persistent inflation, rising interest rates, rising numbers of corporate layoffs and growing restraint in corporate and household spending.

John Kemp is a market analyst at Reuters. The views expressed are his own.

(Edited by Barbara Lewis)

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