Liner bear market on the horizon as rates continue to fall Ship’s crew

From Mike Wackett (The Loadstar) –

Maritime analysts are bearish on the prospects for liner shipping as progress on destocking in the US and Europe has been disappointing.

Indeed, MSI’s June horizon The container shipping report forecasts a “challenging” second half for the sector unless demand picks up “sufficiently to offset looming massive capacity increases”.

And it warns: “Furthermore, the global macroeconomic environment is still far from favorable as significant monetary tightening continues, which we believe will result in recessions in Europe and the US.”

She adds that she expects “only a small increase” in freight rates towards the end of the third quarter, “with risks weighted more downwards”.

UNCTAD: Positive start, bearish outlook for global trade in 2023

Meanwhile, the decline in container spot rates on the main container routes continued this week.

Xeneta’s Asia-Northern Europe XSI component lost another 5.5%, averaging $1,240 per 40 feet. This compares to $10,353 per 40 feet for the same week last year, when many shippers were forced to pay significantly more to guarantee equipment and space on the trips.

And as the three ship-sharing alliances ramp up links between Asia and Northern Europe to allow for the delivery of newly built 24,000 TEU ultra large vessels, it is hard to predict an increase in spot rates in the coming weeks.

However, the news for Asia-Mediterranean airlines is better. Maersk, for example, said this week that demand was “healthy” and that it was working to add capacity on the route.

However, Drewry’s WCI Asia-Mediterranean value fell 3% to US$2,075 per 40 feet, although the premium for shipping companies serving the route is still about US$800 per feu compared to fares to Northern Europe.

In his commentary, Xeneta pointed out that Asia-Mediterranean spot rates are actually higher than contract rates, which she believes is a sign of a strong market.

On the transpacific route, the Freightos Baltic Exchange (FBX) Asia-US West Coast component saw a huge 15% drop this week to $1,213 per 40 feet, an average price that barely breaks even for the lowest-cost airline on the route. For the U.S. East and Gulf Coasts, FBX fell a more modest 7% to $2,322 per 40 feet.

John McCowns analysis Container throughput at major US container ports saw imports slump 21% in May compared to a year earlier. He noted that this was the eighth consecutive month of a double-digit year-on-year decline in US imports.

According to spot rate indices, the transatlantic market appeared to stabilize this week after consecutive weeks of decline, with both the FBX and XSI reading unchanged at $2,082 and $2,050 per 40 feet, respectively.

Still, according to a UK-based freight forwarder who got in touch The Loadstar This week the average prices are not representative of the market.

“Right now, all the major carriers are offering us at least $500 less per box,” he said, “but I’m not sure how long they can keep those prices up.”

The Loadstar is recognized at the highest levels of logistics and supply chain management as one of the premier sources of influential analysis and commentary.

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