Market situation – container flows – December

In order to provide a clear overview, we have broken the markets down into geographical regions. Although not all trades are in the report, similar trends apply. If you require more detailed info on specific trade or topic you can always reach out to your usual Manuport Contact.

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Asia

Last week, the Shanghai Containerized Freight Index (SCFI) showed a slight rise in spot pricing for the first time in several weeks. You can especially see this when you zoom in on the Asia–Europe trade, where rates went up slightly. On other trades out of Asia, rates were still decreasing. The slight increase in rates is linked to the traditional rush of volumes prior to the Chinese New Year Holidays. However, the peak is very low and short compared to other years. Following widespread protests, China began dismantling its 'zero-COVID' regime of lockdowns and testing that had largely kept the virus away for three years. The change of policy has caught the country's fragile health system unprepared, and the healthcare sector is struggling with high hospitalization rates and a lack of medicines. Currently, the government is reporting a very low death rate linked to COVID-19, but several sources doubt the accuracy of these numbers. The impact on the productivity of producing companies and ports is difficult to assess.

Europe

Due to poor cargo demand and low spot freight rates, as well as expected overcapacity, some containers are rerouting the ‘backhaul’ from Europe to the Far East via the Cape of Good Hope. This has a negative impact on the transit time of the vessels, but by rerouting, shipping lines can avoid the high fees for passing through the Suez Canal. Most of the diversions are being done by THE Alliance (HLL/HMM/ONE/YM). The additional transit time is estimated to be between 9 and 16 days. Financially it makes sense for the containers to do this, even with the relatively high oil costs today. The Suez Canal fee for a megamax ship is USD 1,000,000. The cost at a sailing speed of between 10-16 knots (for the entire voyage) for the same vessel is estimated at around USD 400,000. Some of you might raise an eyebrow at the environmental impact, but according to an investigation done by Alphaliner, these detours are CO2-neutral since the extra CO2 emitted is offset by the longer sailing distances (cruising speed between 10-16 knots for the entire voyage).

North America

The Georgia Ports Authorities reported a 6.2% drop in volume in November, which was a welcome relief for the ongoing pressure on the ports’ infrastructure. The lower volumes allowed the Port of Savannah to reduce the queued vessels by 43% from November 1, to 17 container ships. The port authorities expect to clear the backlog entirely by early 2023.

The reports after closing the month of November show that the volumes at the West Coast ports (Los Angeles and Long Beach) fell even further in November, with no rebound expected until the second quarter of 2023 – and possibly even the second half of the year. The Port of Los Angeles had 13 “blanked” (canceled) sailings in November, following 20 in October. Carriers will blank 11 more sailings this month.

General

  • Drop in volumes made visual

The declining volumes are of course not limited to Evergreen, but as is often the case, pictures say more than words. These photos below, published by Alphaliner, are from the same vessel operated on the Asia–Europe trade lane with different time stamps.

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  • Maersk’s Soren Skou steps down

Soren Skou, CEO of Maersk group, will step down and be replaced by Vincent Clerc. Skou has enjoyed a 40-year career at the Maersk group. The official reason for him stepping down is so he can spend more time with his family. It is however very likely that the negative predictions for the global economy had something to do with it. It seems that Soren Skou will close the door behind him, as he has already utilized the option to sell his Maersk shares, worth USD 2.4 million.

  • Inactive fleet stable in early part of December

On December 5, 5.3% of the total fleet was idle. This figure therefore remains unchanged. It is no surprise that most of these idle vessels are situated in dry docks for repairs, maintenance, or retrofitting.

Market Trends

How To read:

  • Applicable trade always mentioned per individual graph.

  • The percentages shown give the difference per trade on 3 levels:

    • Year on Year = Rates agreed now compared to the same period 1 year ago

    • Past 3 Months = Rates agreed within the past 3 months

    • Past 1 Month = Rates agreed within the past month. This can be considered as the reflection of the spot market.

  • ‘Main’ means ports that are normally called on a direct basis.

    • Far East Main = Ningbo, Shanghai, Qingdao,…

    • Mediterranean Main = Istanbul, Alexandria, Piraeus,…

    • South America East Coast = Santos, Buenos Aires,…

    • North Europe Main = Antwerp, Rotterdam, Hamburg,…

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