Our first freight market report of 2023 considers the latest rate and capacity developments and highlights the key developments in air, sea and road freight, to keep you informed and to provide valuable supply chain insights, that will aid your decision making.

Situation summary
In China, rising coronavirus infections following the country’s relaxation of its zero-COVID policy have caused significant disruptions in supply chains.

Our team in China confirm that some shipments are being delayed from factories, due to high numbers of COVID cases among work forces, which are hampering production and delivery output.

Poor cargo demand, softening freight rates and a looming overhang of containership capacity have prompted carriers to aggressive blank sailing programmes and also, increasingly, to avoid the Suez Canal on backhaul voyages from Europe to the Far East.

Carriers have made significant capacity cuts, in increasingly desperate attempts to support rates. 29% of Trans-Pacific capacity was blanked in October, 24% in November and 21% in December. On the Asia-Europe route, 26.5% was blanked in October, 17% in November and 19% in December

Around a dozen ships are currently returning to Asia via the Cape, and the count will likely increase in the coming weeks. Most of the diversions were made by ships of THE Alliance.

The diversion around the African continent adds about 3,500 nautical miles of steaming distance, which means the detour will add nine days to the ships’ transit time.

Meanwhile, global schedule reliability and average delay time improved once again in November, but it remains to be seen what impact the Cape diversions will have.

Schedule reliability rose 4.7% month on month and stood at 56.6% as of the 30th December, while over the same period, average delay time decreased by 0.58 days month on month to 5.04 days.

While the danger of further strikes at UK’s Felixstowe port has been avoided after a pay deal was reached with unions, workers are on a go-slow at Hutchison Ports’ Delta II terminal in Rotterdam, with 82 hour delays for barge operators and shippers waiting seven days for their goods.

There are some instances of backlogs and tight spaces ex-EMEA and ex- China, which is likely to slow rate decreases on certain trade-lanes.

As we move into 2023, high jet fuel price likely to affect rates and fuel surcharges are likely to fluctuate amidst oil price fluctuations.

Air freight volumes remain low and with global inflation levels likely to remain elevated into 2023, demand is likely to decrease even further.

Chinese factory activity fell again in December as the spike in Covid-19 cases disrupted production after Beijing started dismantling its pandemic curbs.

The manufacturing purchasing managers’ index (PMI) fell to 45.3 in December from 46.5 in November. The index has registered below the 50- point mark dividing growth from contraction for five straight months.

Despite raised hopes, eCommerce movements added negligible growth to global volumes over the final two months of 2022.

As ocean freight freight costs reduce and performance improves, we are seeing a shift in transport mode from air to sea

Volumes are expected to witness flat growth in the first two quarters of 2023, although the Lunar New Year may trigger a short volume spike.

The market moderation seen in the second half of 2022 is spilling over into 2023 and the European road freight market is projected to lose speed, expanding by only 1.1% in real terms over the next 12 months.

The energy crisis, high inflation, and economic recession all weigh on consumer purchasing power, which in turn impacts demand for road transport – a development which can be seen across the entire European continent.

And where demand does pick up, driver shortages are impacting the amount of capacity available.

According to TIMOCOM Freight and Cargo Exchange, in certain European countries there has been a significant drop in the vehicle space being offered. One of the key reasons behind this is probably the shortage of drivers.

In Germany for instance, 24% less capacity was posted on the TIMOCOM Freight Exchange in the first nine months of 2022 compared to 2021. A similar pattern can be seen in carrier countries including Hungary and Romania.

Since the beginning of the year, companies from these three countries have placed an average of 8% less vehicle space on the TIMOCOM Marketplace than in the same period in 2021.

Our teams in the UK and across Asia continuously scan the evolving global multimodal operating environment, to identify potential issues and adapt operations, to avoid pitfalls that may challenge our customers’ supply chains.

We share the most important news and developments, so that you can make informed decisions that protect your supply chain.

To discuss any questions or concerns you might have, about the issues highlighted here, please EMAIL for our immediate attention.