"All that for that!" is what one is tempted to say as we leave a month of February which was disappointing for shipping companies and forwarders. Spot rates were a long way short of the record levels they reached in 2021 and currently stand at a low point of around $1,000 for goods leaving China for North Europe and $2,000 for those bound for the West Med.
The phenomenon was expected but the fall in revenues and cargo volumes was striking in its suddenness. For the shipping companies, as for the forwarders, monthly performance indicators are in the doldrums and demand is still on a downward trend. These sharp ups and downs are difficult to deal with on the basis of traditional financial logic.
We should not, however, take too catastrophic a view of the situation. Excepting exports from China, the other shipping markets are holding up quite well in general. In this situation, it is important to recall that there is always a big difference between a low freight rate and one which enables a container to be actually loaded rapidly aboard a ship. This is currently truer than ever. Indeed, we are seeing a welcome rehabilitation of commercial relations between shippers and shipping companies.
For groups which have opportunities for growth in other segments of the transport and logistics market, moreover, things are going better, since some of these other activities offer good prospects.
In this situation, port terminals are on the look-out for ships again and container dwell times are returning to their pre-pandemic level. Congestion has clearly come to an end, and this will inevitably have a positive impact on transit times, even if services continue to be irregular.
Container availability is also returning to normal in the major global demand zones. China now has a lot of empty containers in stock and does not need fresh supplies in the short term.
In short, market tensions have disappeared, whether it be over access to ships, containers or infrastructure. At the same time, we are seeing the arrival on the market of the first of the new ships which were ordered by the shipping companies when they had abundant spare cash.
These ships are arriving at the worst time since there is insufficient demand to meet them. Even if older ships are taken out of service, the shipping companies will not be able to balance out new arrivals with an equivalent level of demolitions over the next few months. This imbalance will have a negative impact on the shipping companies in 2023 and probably in 2024 as well.
On the demand side, the tender call period is continuing. Among shippers, we are seeing two contrasting kinds of behaviour:
For many shippers, the spot market is sufficiently comfortable at the moment for them not to need to seek firm contractual rates (...)