Shipping Industry professionals anticipate market improvements already in Q2 2023 : Container xChange

Cont’d. from Pg. 3

The container price sentiment index (xCPSI), a sentiment analysis tool by Container xChange that concurrently surveys supply chain professionals on their short-term price expectations, continuedtoshownegativereadingsuntilmid-March.Butthe results consistently turned positive, reaching an all-time high at the beginning of April, when the index started showing confidencebuildingforthecomingquarter.

Whiletheindustrysentimentisgraduallyturningpositive, therehavebeenmanyheadwindsintheshippingsectorinQ1.

“The global container logistic ecosystem is like a spider’s web. One disruption does not linearly impact the knot. Instead, every disruption reverberates across the web—sometimes in unexpected directions. The increase in FED rates, the banking sector crisis, the strikes might seem concentrated in one region, but they have their impact across all trade lanes .” shared Christian Roeloffs, cofounder and CEO, of Container xChange as he commented upon the currentstateofthecontainershippingindustry.

Looking back at the first quarter of 2023

Overall, in the first quarter of 2023, North America registered the biggest decline in average prices for 20 ft dry cargo containers. After North America, the Middle East and ISC region witnessed the second biggest drop in container prices,followedbySoutheastAsia.(Seedatabelow) demand and freight demand. The anticipated changes in the industry,particularlyaftercontractrenewalstowardstheend of the first half of 2023, signal a crucial time for preparation. With cautious optimism, we foresee that this year’s peak season will be better than the previous year, as we leverage our experience and industry insights to navigate the challenges and capitalize on the opportunities that lie ahead.” commented Harry Duong, Pudong Prime, an international freight forwarding company, while sharing about the company’sforecastsfortherestoftheyear.

The industry is hopeful that the pent-up freight demand will be propelled by the beginning of the retail inventory replenishment cycles in the quarter after a slump in demand andoverstockingbyretailers.

xChangeContainerPriceSentimentIndex(xCPSI) Contract Negotiations in Q2 2023

Industry sources reveal that though the negotiations are due in May, shippers might delay these since the contract rates are still higher than the spot rates. So, the shippers are holding back to place themselves better during those negotiations. Another expectation is the reduction of contract tenuresfromoneyeartosmallertimeframes.

Outlook 2023

Commenting on the outlook for the rest of the year, Christian Roeloffs shared further, “Despite avoiding a global financial and economic recession for now, the shipping industry is experiencing a freight recession due to the postponement of inventory replenishment cycles by retailers who overstocked. As we look ahead, we anticipate a subdued rebound in demand as retailers begin to deplete their excess stockinthecomingmonths,leadinguptothepeakseason.”

April2023xChangeIndustryPulseSurveyresults

The Southeast Asia Story

Southeast Asia has emerged as a strong economic “partnership region” as the world looks to a more diverse sourcing and manufacturing trade strategy.

“The diversification of trade will prove to be beneficial for ocean trade because this will cause a boom to the regional trade within Asia. It will also leadtomorelocationsaddingtothedirecttradefrom the region to North America or to Europe. So, diversification will play a role and in general, this will soak up more capacity thanwhatwewouldhavehadontranspacificChinatotheUSA or China to Europe alone.”shared Christian Roeloffs.

According totheVietnam Customs data, Vietnam’s two-way trade in February was up almost US$3 billion over January despite February being a slightly shortermonth.Ontheotherhand,China’sexports to the EU totalled RMB 552.837 billion from January to February 2023, a year-on-year decline of5.0%.

Asurveywasconductedrecently(April2023)withcloseto 664 supply chain professionals by Container xChange and askedhowtheyperceivedthepeakseasontodevelopthisyear in2023ascomparedtothelastyear.

“This is an important time for NVOCCs and Freight forwarders who are diligently crafting their strategies to adapt to the current market conditions impacting consumer

According to the 2023 Container Shipping Outlook by Alix Partners published in March 2023, “Bangladesh, Malaysia, and Vietnam are already eating into China’s share of consumer goods exports and foresee China’s position eroding further as nearbycountriesincreasetheirsharesofsupplychainsandas government policies and business strategies outbound momentum. Mexico and Eastern Europe stand to gain over themediumtermasmoreandmorevolumesshiftoutofChina andtoneighbouringcountries.”