Freight market report – March 2023
Further pressure on freight markets will build as airline passenger capacity is added and the container shipping lines receive new-build vessels, but there are hopes that rate erosion may still ease, as rock-bottom prices are not good if carriers decide that revenue levels are not sustainable and simply stop serving the market.
We are already seeing air cargo carriers exiting some routes and the container shipping lines are restructuring their networks to meet the reduced demand, with 2M withdrawing one of their primary Asia-North Europe services, after blanking the service for consecutive weeks.
SEA
Demand and freight rates on the main trade-lanes continue to soften and there is anticipation of further declines, as new-build capacity is added.
Rates from Asia to Europe softened again and carriers are now actively seeking long-term business with fixed rates, while backhaul rates are decreasing slightly and remain on a very low level.
The space situation is relaxed and there are no issues with capacity, only vessel delays, even though the high number of blank sailings in March were expected.
Container shipping line schedule reliability hit 52.6% in January, representing an improvement of 22% on a year earlier, while the average vessel arrival delay is 5.26 days, which is a decrease of -2.68 days on 2022.
• Rates have softened again with expectation of further drops
• Pressure is building as new capacity comes online
• Carrier’s are looking to secure long term business with fixed rates on the table
• Schedule reliability has improved since 2022
AIR
As previously reported there was no sign of the traditional volume surge post CNY and volumes remain low compared to last year, with rising interest rates and the Ukraine crisis continuing to affect the world economy.
Most airlines have available capacity at hand and are absorbing low yields amidst lean volumes, with aggressive spot market across most trade-lanes.
Spot rates remain dynamic but on the lower side compared to last year as the demand capacity balance remains unbalanced and with aggressive spot market across most trade-lanes there is little value in setting monthly rates.
Global oil inventories have started to build slowly, which should prompt a gradual decline in average prices, providing there are no more global shocks.
• Rates have remained low since CNY and should stablise until demand increases
• It continues to be a challenge setting monthly rates, so we suggest spot for now
• If you would like to lock in longer term rates on our core lanes (SHA, HKG, SZX), we have some options for you to consider
• Carriers are now focusing on Q3 for a bigger increase in demand
OVERLAND
Several road freight factors suggest that freight rates may stay strong. The rise of toll road charges in Europe, the increase in living costs and driver wages will probably combine to keep freight rates elevated.
Weak confidence and high inflation continue to reduce demand and pressure for road freight services from consumers and producers is falling.
Considering the economic incertitude, it is difficult to make reliable forecasts for the years ahead, and the outlook for the European road freight market will depend on the outcome of various unpredictable factors.
• European road transport capacity is up 20% year-on-year
• Transporeon’s spot index is down 11% year-on-year
• Industrial production in Europe dropped 1.7% year-on-year
• The outlook for 2023 suggests road freight rates will stay strong
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.