Freight market report – July 2023
A subdued peak season, followed by a lengthy slack period, will prompt further rate erosion and while the Asia to Europe sea freight trade-lane has been relatively healthy and positive in June, with record numbers of new- build capacity being delivered through this year and next, carriers are expected to restore the blank sailing program.
Airfreight rate softening between May and June is not unusual and prices tend to fall incrementally during the summer, but it remains to be seen if they will pick up again in September ahead of the summer peak season.
The latest data shows that year-on- year haulage and courier prices remain stable, despite inflation pushing prices up elsewhere, though this stability may be short- lived as the HGV levy is reintroduced and staff shortages become a concern.
SEA
Blank sailings in June were lower than previous months, as the carriers tried to secure additional booking on their newly deployed vessels, achieving load factors of 85-95%, which in turn affect rate levels.
Most carriers are now looking to implement further blank sailings in July, which will affect transit times and cause delays.
With the ocean carriers now in the red, their attention will soon be on stopping loops, if this trend continues into August, which is the traditional start of the peak season.
• Rates in June and into July continue to soften
• BAF surcharges continue to soften, with no increases expected in July
• Further blank sailings anticipated going into July
• With ocean carriers in the red, they may soon consider stopping loops
AIR
Underlying trends were little unchanged in June, with robust eCommerce volumes keeping some demand in the market.
The addition of passenger belly- hold space for the Summer season will see some freighter space exit the market, due to an overall lack of demand.
June overall showed a slight tonnage decrease of 2%, which we suspect will remain the case for the remainder of July.
• Airfreight prices remain relatively stable
• Rates are 40% lower than last year, but well above pre-pandemic levels
• Carrier costs have been rising fast
• Excess capacity may decrease slightly after the summer holiday period
OVERLAND
The UK and EU driver shortage continues to worsen, with the IRU reporting shortages that exceed 380,000, which accounts for approximately 10% of demand, with the expectation that this will increase to 14%, with hauliers and governments seeming unable to act.
In June, the overall TEG Index price-per-mile has risen slightly, with a 0.3% change, while over the past month, indexed courier prices increased by 1.2% and haulage prices rose by over 3%, though economic forecasts suggest that even these small changes may be short-lived.
• Some lane rates have softened due to the decline in market volume
• Rates are expected to soften, but remain elevated
• The driver shortage continues to impact capacity and prices
• At 47, the EU boasts the highest average driver age in the world
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