In its latest update, freight rate benchmarking and market analytics platform Xeneta has said that although ocean container shipping demand from China to North America and North Europe broke records in June, there are signs volumes may have peaked.
Xeneta writes that 800 000 TEU were shipped from China to North Europe in June. This, says Xeneta, is the highest ever monthly figure on this trade.
The company adds that while China to North America volumes (1.36m TEU) did not reach a record high for a 1 month period, it was a record as far as June is concerned.
Xeneta says it was also the 8th highest month on record, surpassed only by huge volumes shipped during the peak of the pandemic period.
Commenting on the figures, Peter Sand, Xeneta Chief Analyst, said:
“Conflict in the Red Sea has brought a major shift in the traditional seasonality of ocean supply chains, with concerned shippers rushing to import as many goods as they can earlier in the year. Shippers assessed the impact of the Red Sea conflict on ocean supply chains and are not prepared to take the risk of repeating the chaos of the pandemic years – meaning we have seen record-breaking volumes on major fronthaul trades out of China ahead of the traditional peak season in Q3.”
Xeneta notes June’s figures coincided with a fall in average spot rates on trades from the Far East to the US and North Europe.
Data from Xeneta shows spot rates into the US West Coast and US East Coast rose 144% and 139% respectively between April 30th and July 1st. In addition to this, spot rates went up 166% into North Europe within the same timeframe.
Reacting to this, Sand added:
“Shippers wanted to protect supply chains and that has come with a heavy price tag. The massive volumes shipped in May and June contributed to the severe congestion seen at ports in Asia and the dramatic spike in rates. Those shippers who rushed imports may have spent far more than they wanted to, but they clearly felt it was a price worth paying to lower the level of risk in their supply chains later in the year. We have seen shippers importing Christmas goods as early as May because hindsight is a luxury they do not have – they needed to take immediate action.”
Despite all this, Xeneta believes there are signs that demand for container shipping from China to North America and North Europe may have peaked.
The company states that average spot rates from the Far East to US West Coast and East Coast are now softening, having fallen by 17% and 3.2% respectively since 1 July. Moreover, average spot rates from the Far East to North Europe have now fallen slightly by 1.6% since the end of July.
This, Sand argues, suggests that we already past the point of peak demand:
“There is a clear correlation between record-breaking volumes and spot market developments on the major trades from China to North America and North Europe. If we are now seeing spot rates softening in August, that would suggest we have also already seen the peak in demand for ocean container shipping and volumes should be lower in July and August during what would ordinarily have been the peak season.”
Photo by Leon Skibitzki on Unsplash
