Freight market report – August 2023
While much has been made of the impact of the peak season from Asia on sea freight rates, arguably the line’s capacity management is a bigger driver, with rising rates to the US and attempts to recover revenue from Asia to Europe and the Med.
Sizeable GRIs by Asia-North Europe ocean carriers have been imposed a number of times in August, but there are already signs that only a few will be sustained, with rate indexes showing falls.
Air freight volumes continue to see a slow decline month on month and show no change for August.
The volume forecast specifically for air freight this year is projected to be around 4.7% down on 2022 levels, with the war on Ukraine and high inflation being the main drivers for driving down volumes.
The European road freight sector continues to show a picture of weak recovery, with unpredictable factors creating an uncertain, challenging and complex market environment.
The market moderation seen in the second half of 2022 has spilled over into 2023 and as a result, the European road freight market is projected to lose speed in 2023, expanding by only 1.4% in real terms.
SEA
Blank sailings in July continued with many sailings being cancelled, causing space restrictions and roll pools to again be formed.
The carriers used this strategy to implement a GRI for August, which slipped a little, but for the most part has been sticking.
Although the 2023 peak season may be muted in the US and Europe, trade dynamics may gradually improve and the lines would dearly love to increase rates, though with sentiment still muted, this quarter will be critical.
• Rates for August have seen a GRI imposed
• Lines implement further blank sailing for Q3
• Most carriers looking to increase rates for Q3
• New-build deliveries influencing carriers’ decision making
AIR
Global air cargo demand fell by 3.4% year-on-year and air cargo capacity grew 9.7% MoM.
Leading indicators of air cargo demand, including global goods trade, manufacturing PMIs, and inventory-to- sales ratio, continued to point to contractions. However, improvements in inflation in major economies could provide a tailwind to the global economy and air cargo demand.
Major trade lanes including Europe-North America and Asia- North America experienced smaller annual contractions in international air cargo demand.
• Volumes continue decline MoM
• Annual volume is projected to be 4.7% down on 2022 levels
• Rates ex China remain subdued, and no significant change expected
• With rates seemingly bottomed out, hopes are rising for a peak season to start soon
OVERLAND
Spot and contract rates are falling, with demand offset by available capacity improving.
Spot rates indexes fell for two consecutive quarters, which is the first time since the second quarter of 2020, but remain slightly above 2022.
Spot rates have declined 1.5 times faster than contract rates on average in Q1 2023, which is a result of falling demand from European economies, reducing the immediate demand-side pressure on spot market rates.
• Low demand contributing to 23% decline in truck traffic in last qtr
• EU driver shortage not improving
• Rates remain stable
• Major rail freight investments
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