Maersk Asia Pacific market update (October 2022).

Global economic conditions continue to worsen with record inflation, a fall in global manufacturing exports and the Russia-Ukraine conflict all hitting market sentiment. Consumer concerns over higher prices and full inventories in the US and Europe are also one of the reasons for a likely drop in retail lifestyle volumes between September-November, according to a Maersk survey. This will further pressure container shipping where the fall in demand has led Maersk to introduce further measures to match cargo volumes with capacity on key trade lanes from Asia and on the Transatlantic.

High inflation levels and cost of energy continues to be a key concern for consumers, and at present reducing the demand for transportation services. The pace of market normalization has been faster than expected, and the combination of lower sales and shorter lead times (from reduced congestion) is resulting in full warehouses in US and Europe. We expect that inventory levels will stabilize through Q4 and a return to normal bookings patterns. At Maersk we are working closely with our customers to support them through this period of turbulence, offering options of both speeding up and slowing down cargo arrival to match the temporary change in demand pattern, and we are seeing a consistent improvement in the timeliness of both loading and delivery of containers.

Morten Juul, Asia Pacific Regional Head of Ocean Management

Market Trends

The global economy continued to lose steam in the third quarter according to global measures of economic activity and confidence with a sharp slowdown in the US, Europe and China. Global purchasing manager’s indices for September all signaled slowing growth. The global composite PMI flatlined in September at 49.7 although the figure excluded input from China and India due to public holidays. A figure below 50 shows a contraction in manufacturing sentiment. The global manufacturing orders-to-inventory ratio also fell further in September, dropping to 0.94 while manufacturing export orders also slipped. This will further impact the container shipping market which has already seen negative volume growth in most trades between May-July. It is likely the slide in spot container freight rates continue.

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While port congestions are improving gradually across Asia, North America and Europe, volume prospect remains to be weak. The change from sudden boom into current low demand situation will require further adjustment in customer’s sourcing and purchasing plan as well as carriers’ network, which can lead to uncertainties and further disruptions to the supply chain in coming months.

Matching capacity with demand: With forecast reductions in cargo demand Maersk is taking steps to balance capacity with expected volumes on the main trades connecting Asia-North America, Asia-Europe and Asia-Mediterranean over the coming weeks. Our overall goal remains to provide our customers with predictability and to ensure minimal disruption to their supply chain. In cases of blanked sailings and vessel sliding, we will supply alternative routings and coverage for affected vessel positions, and Cargo transfer will be arranged to minimize the impact on customers’ business.

Bottlenecks across the Transatlantic network mean we have also had to reschedule sailings on out TA5 and TA6 services. This situation is driven by several external factors, chiefly terminal congestion, which has contributed to an accumulation of delays on our services resulting in gaps in the departure schedules that require adjustment.

Pacific North-West services: Rail congestion and berthing restrictions in Vancouver have made it difficult to maintain schedule reliability on our TP9 and TP1 services throughout 2022 both in terms of departure frequency and extended transit times. Consequently, we will merge the TP1 and TP9 loops into a new TP1 service covering Vancouver and Prince Rupert from late October. The existing call at Seattle will be moved to our existing TPX service while our currently infrequent TP7 service will be suspended. Nansha and Kaoshiung will be covered via alternative products.

South Africa port strike: Disruption to services calling at South African ports will continue into November even though a dockworkers strike that closed all the major terminals operated by state- owned operator Transnet ended around October 20. Maersk and partner carriers operating mainly Asia-Africa and Middle East-India-Africa services have announced several skipped calls at Durban, Cape Town and other ports. Cargo will be transshipped onto other services and routed back via Singapore, Pointe Noir, Walvis Bay and other ports in early/mid-November. Maersk said in a customer advisory that the impact “will be felt for weeks to come and ongoing network contingencies will be needed to offset delays on cargo arrival and loading of exports”. Transet said in a statement that cargo backlogs in container terminals at major ports including Durban and Cape Town meant that the force majeure declared when the strike started on October 6 is expected to be lifted by October 31.

By Maresk Editor.
Source: Maersk. 6 November 2022.

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