Freight market report – April 2023
Things have not been easy for the container shipping lines in recent months, but this appears to be changing, with full ships and stabilising spot rates, after months of rate erosion and abundant capacity.
The International Air Transport Association (IATA) released data for February 2023 global air cargo markets showing that air cargo demand rose above pre-pandemic levels, with demand for manufactured goods from China, the world’s largest export economy, growing.
The easing in the road freight capacity bottleneck situation, continued in the first quarter of this year, but despite a higher supply of spare capacity and a drop in diesel prices rates in general have fallen only slightly since the beginning of the year.
A definite end to rock-bottom freight rates could be in sight, as carriers take advantage of tight capacity management and full vessels to launch rate restoration programmes across their networks in the next few weeks.
The ocean carriers are preparing to unleash a barrage of GRIs this spring, in order to shore-up freight rates ahead of the peak season, and to mitigate the weak demand, they are planning to blank up to 50 headhaul sailings from Asia to the US east and west coasts this month.
It remains to be seen whether they will look to announce similar GRIs on other routes, including the key Asia-North Europe trade-lane.
– April seems to be a turning point with full ships and stabilising rates
– Rates from Asia to Europe remained stable with a small drop for March
– Lines continue to adjust and tighten capacity to keep vessels full
– Big spike in oil prices followed the surprise OPEC+ decision to cut output
The latest industry data offers a glimmer of hope for the international air cargo industry, with demand and capacity improving in February and March.
The shifting volume and capacity balance is reflected in the global dynamic load factor, which in March was 60%, 6% short of the same month a year earlier, but up 6% on January’s seasonal low.
There was also a sense of a return to normality in March and the previous month’s rate fall is attributed to shrinking cargo volumes and recovering capacity.
Global cargo volumes have been falling for the past 13 consecutive months but showed some sign of relief in March, as volumes registered their smallest drop, of 3% year on year, the lowest monthly decline in over a year.
– On a downward trend airfreight rates have stablished and increased in some markets
– Belly-hold capacity has increased due to passenger demand, but volumes remain low
– Space has tightened on some routes and we recommend booking 4-5 days prior to uplift, to ensure space is secured
– If you would like to lock in longer term rates on core lanes, we have some options for you to consider
Although the global economy continues to be severely impacted by challenging operating conditions, a cautiously positive trend is consolidating at the end of the quarter, among economists and road transport operators.
The latest data from the TEG Road Transport Price Index is tracking a small fall in haulage prices of 3% lower than the start of the year and were at their lowest level since March 2021.
The TEG data suggests that despite cost and workforce pressures, hauliers are holding back some increases, but with the Windsor Framework potentially prefacing a better working relationship between the UK and EU, they will be hoping that an economic upturn will trigger increased volumes and better margins in the short term.
– Increase in available capacity is having an impact on the market
– Fuel costs reducing and will hopefully soften further into Q2
– UK law change could see HGV drivers pay an additional £100
To discuss any of the issues highlighted here, or to discover the value that PSP Worldwide would bring to your supply chain please EMAIL our managing director, Colin Redman.
We continuously monitor the evolving logistics environment, to share breaking news and developments, so that you can make the informed decisions that will protect your supply chain.