Freight market report – September 2023

The latest Drewry World Container Index is now 85% below its 2021 peak and 42% lower than the 10- year average, indicating a return to more normal prices. However, it remains 10% higher than average 2019 (pre-pandemic) rates.

August was a quiet month for Air freight and we see no meaningful signals of any kind of peak, but there could be a slight uptick in demand and volumes as we approach the Chinese Golden Week in October.

Despite some recent rate gains, driven largely by strong e- commerce volumes, air freight rates remain relatively stable.

The first half of 2023 for road freight has been characterised by the effects of the economic slowdown, but it is important to note that road freight prices in Europe remain on average 12-15% higher than before the pandemic, reflecting a structural increase in hauliers’ costs

SEA
We are expecting more blanked sailings on the main trade lanes out of Asia and even cancelled services on the transatlantic trade, unless there is an urgent reversal in the recent freight rate slump.

Sea freight spot rates ex-Asia to both North Europe and the Mediterranean have fallen again, prompting carriers into last-minute cancelled sailings, over and above their already aggressive blanking programmes.

• Bearishness has engulfed the market as low demand leaves carriers feeling vulnerable
• September GRIs diminished after carriers extend rates past the start of September
• Any material boost in volumes for the traditional peak season is dissipating
• Carriers are implementing further blank sailing and especially before the Chinese Golden Week

AIR
August, for the Air freight market was very quiet, as was July, and there are no meaningful signals of any kind of peak arising this year, which suggests that any demand recovery is unlikely this year.

The market seems to have levelled out, but still holds a lot of uncertainty, though with multiple blank sailings scheduled around Golden Week and passenger belly- hold capacity likely to be withdrawn, there could be upward pressure on Air freight rates in the second half of October.

• Slight rate increases on some lanes do not indicate a peak season
• Cross border eCommerce is propping up demand
• We could see a slight uptick in demand as we approach Golden Week
• Now is the time to lock in longer term rates

OVERLAND
Road freight rates across Europe are expected to continue falling through Q3 as demand remains slack and available capacity remains high.

With demand not expected to pick up again until 2024, we would expect rates to continue their downward trajectory, albeit to a higher floor due to a bigger carrier cost base.

• Data shows a 23% y-o-y decline in truck traffic for the last 3 month, due to capacity reductions
• Despite improvement, the EU driver shortage continues to remain in play
• Driver and vehicle supply still influencing rates and capacity
• Rates stable however this could change if the market picks

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.

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.