Peak season 2022 has not arrived accompanied by the usual jostling for space, spike in rates and long booking lead times we are used to seeing.
From the historical highs just a year ago, container freight rates from North and South East Asia are falling every week as the traditional peak season has failed to materialise. Rates ex-Europe and trans-Pacific remain strong.
The industry has long predicted a rates collapse from the unprecedented highs, but the speed at which it happened has caught many by surprise. Global economic pressures have destabilised the market, with rates trending downward as supply chains normalise and additional capacity flows into the market.
Inflation and ongoing interest rate hikes have caused sales to plateau, leaving stock levels higher than anticipated. This contraction, coupled with significant improvements to the inefficiencies that previously plagued supply chains throughout the pandemic, has contributed to an ongoing decline in freight rates, with shipping lines underselling space and driving the market down with unseasonal low spot rates. Large importers with direct carrier rates are hesitant to recommit as they believe rates are yet to hit rock bottom. Shipping lines are concerned about a dire booking forecast as demand in major import destinations slows.
While we are experiencing elevated service levels across the system as congestion eases and capacity frees up, supply chains must remain vigilant and agile. Ongoing uncertainty remains with the threat of future lockdowns, congestion and manufacturing delays.
All of this makes for very unusual peak season conditions indeed.
Our forecast for peak season and beyond:
The balance between supply and demand will continue to determine rate stability.
The good news for importers is that this unseasonal trend will continue, with demand expected to be flat across the remainder of October and November.
In further good news, the sector also has the prospect of a new ship-building order book at 30% of the current fleet, with new vessel deliveries expected to make their way onto the water soon.
Although this is generally a busy time as businesses gear up for the festive season, we implore businesses to start speaking with their trusted partners immediately.
Keeping customers fully aware of the market trends is critical in what we do. With the volatility expected to continue and the added challenge of the low Aussie dollar, why not speak with us today as part of your shipping cost reduction strategy? Please email me at email@example.com.
Magellan Logistics provides freight and logistics services to all industries, including sea freight, air freight, customs clearance and the all-important digital freight portal providing 24/7 visibility of all your shipments. Get in touch with one of our freight specialists today to discuss your peak season needs.