Weak demand forecasts for the early part of 2023, coupled with high inventory levels, are said to be behind the move to cut sailings by half.
According to a report in The Loadstar, ocean carriers are preparing to blank up to half of their scheduled sailings from Asia to North Europe and the USA after Chinese New Year, which falls on 22nd January in 2023. The move is thought to stem from extremely weak demand forecasts.
High inventory levels in Europe and the USA, coupled with uncertainty surrounding future consumer demand, has seen orders cancelled or postponed, resulting in Chinese factories preparing to shut down well ahead of the Chinese New Year holiday. Toy World has also seen video evidence emanating from China which suggests that Covid rates have spiked dramatically after restrictions were relaxed several weeks ago, which may also have influenced the decision to close factories.
In its latest North America market update, Maersk commented: “More shippers are opting to wait until the holiday period concludes, as stocks shipped earlier in 2022 are already in position to fulfil demand”.
However, after several consecutive weeks of double-digit falls, container spot market indices plateaued last week, suggesting the bottom may have been reached in terms of pricing in the short term. On the Asia to North Europe trade lane, the average spot rates recorded by the publishing indices ranged from a reading of $2,167 per 40ft by the Freightos Baltic Exchange, down to $1,674 per 40ft by the WCI.
However, The Loadstar report also quotes sources which warn that space is becoming tight for sailings to North Europe prior to CNY. The sources also suggest that many annual contract negotiations for the route – traditionally finalised in December or January – appear to have stalled, as neither shippers nor carriers want to commit in the current uncertain market conditions.