As you may have seen from a recent article, the COVID-19 global pandemic sent ricochets across every industry, and freight was no exception: while global sea freight rates remain higher than 2021 levels, they continue to suffer from a steep global decline. A recent report by Xeneta shows that spot rates dropped on average 75% across all 6 routes since January 2022, with the Far East to Northern Europe route dropping a huge 83%. While much of this can be attributed to COVID-related factors, there are other influences as well. China’s “zero-Covid” lockdown policy has inevitably caused problems with docking, ordering, and the general labour operations of freight contracts. Furthermore, the cost-of-living crisis means that customers are not as willing to buy as many products, resulting in lower freight volume. Additionally, the predicted peak in the US and UK in the weeks leading up to Christmas was underwhelming, leading some experts to contend that this global decline in freight will continue into 2023.
Data from the online provider Freightos shows that rates for shipping containers in the week of March 17 from East Asia or China to the US dropped once again, staying consistent with the trend. Spot rates to the US West Coast are down to just above $1,000/FEU (down 94% year-on-year), and to the US East Coast down to just below $2,200/FEU (down 87% year-on-year). Statistics pertaining to container ships are often relevant because of the chemicals that they carry (such as polyethene and polypropene). This is therefore consistent with the Drewry World Container Index, which demonstrates a 2% decrease in average global container rates.
Liquid tankers had a steadier week, with US chemical tanker freight rates remaining normal, according to the ICIS, though that is excluding the route from the US Gulf (USG) to Brazil, which soared significantly. In contrast, the route from USG to Asia had spot rates drop. This has been chalked up to the fact that there was increased demand for space in the period from March to April, causing freight rates to spike. Additionally, the route from USG to Asia saw increased activity for smaller parcels, which may have been impacted by the Chinese no-COVID policy.
Inland trucking deliveries rose higher on the week of 17 March, but were also down 5% month-on-month, according to FreightWaves Sonar’s National Truckload Index. Contract rates are also slightly higher in the month of April. ATA chief economist Bob Costello expects that the trucking industry is hoping for retailers to get rid of excess inventory; he also predicts that, because the index is growing in a cumulative fashion on a year-on-year basis, we can expect that the freight industry will hold up.
While there are some benefits to reduced demand (such as increased storage space, reduced congestion, and more efficient transit times), there are patent inconveniences as a result. At Hawley Logistics, we have 35 years of experience specialising in road freight, air freight, and sea freight transit. Due to our comprehensive UK distribution and global networks, Hawley Logistics can offer next-day express delivery in the UK and across mainland Europe. Feel free to get in touch via 01706 826322 or email info@hawleylogistics.co.uk. Alternatively, you can arrange a callback service where we can get in touch at a later time.
