Ocean freight orders signal sharp drop in consumer demand

Ocean freight orders signal sharp drop in consumer demand

For the shipping industry to halve its carbon footprint by 2050, promising technology will have to become reality, and efficiencies will also have to increase.

Lucy Nicholson | Reuters

A major consumer pullback is evident in ocean shipping, with logistics officials telling CNBC they saw a 20% decline in ocean freight orders for the months of September and October. The decline in demand affects many products, including machinery, housing, industry and some clothing. Logistics CEOs tell CNBC the reason is a combination of too much inventory and a lack of clarity on consumer demand.

The shipping trend echoes recent comments from logistics industry executives. Georgia Port Authority Executive Director Griff Lynch said he expects the number of waiting ships to decrease over the next few weeks after seeing calls from historic ships.

In apparel and footwear, executives say there is no definitive trend, although inventory issues are becoming more common. Nike’s overstock problems announced last week in its results weighed on the stock.

“Inventory levels are high as consumerism shifts more toward off-price,” said Brett Rose, CEO of United National Consumer Suppliers. “Major brands are very aware of the season and current trends. A Bloomingdale’s consumer does not want last season’s shoes or handbags. These items will appeal to consumers at retailers like TJ Maxx, Marshalls, Ross Stores,” he said.

Seko Logistics told CNBC that orders for big-ticket items such as smart parcel lockers, integrated server racks, ultrasound machines and time-sensitive goods like retail displays are still strong.

DHL Ocean Freight told CNBC it currently sees no indication of a 20% drop in orders. But with no rush expected in the build-up to China’s Golden Week national holiday, he expects demand to be stable in October. The continued threat of industrial action among railway and port workers in certain geographies, port congestion in Europe and weather-related schedule disruptions will likely lead to more canceled departures and missed ports, partially offsetting some of the rate cuts from Asia-Pacific.

Ocean fares drop, ships are canceled

To set a floor on prices, shipping lines are doing what are called tactical void crossings so they can match ship space with orders, which they hope will stop prices falling. In a note to customers, HSL Logistics said its vessel reductions were nearly 50% and the decline in vessel capacity could continue through 2023 until demand picks up before the Chinese New Year. , which is the end of January.

It will take time for the reduction in capacity to stop the fall in freight rates. According to Freightos, Asia-West Coast US prices (FBX01 Daily) fell 8% to $2,978/forty equivalent units (FEU). This rate is 82% lower than the same period last year. Freight prices for the Asia-US East Coast route (FBX03 Daily) fell 5% to $6,952/FEU, and are 63% lower than rates this week last year.

The other data points that signal a decrease in orders are rejections of outbound tenders.

The higher percentage of rejects indicates a more restricted capacity; the lower the percentage, the lower the capacity. “Right now, we are tracking 2019 levels and are down 80% from a year ago. In terms of spot rates excluding fuel surcharges, we are currently 31% below what we were last year,” said Kevin Hill, Communities Manager. and search for FreightWaves.

CNBC’s supply chain heatmap shows that East Coast ship congestion continues and the impact of Hurricane Ian will delay clearing ship congestion, according to MarineTraffic.

During the period Sept. 12-18, the Port of Savannah achieved the highest average weekly number of days waited at anchor since April 2022, according to Alex Charvalias, supply chain in-transit visibility manager. at MarineTraffic. “Due to Hurricane Ian, there have been no recorded ship calls to the Port of Savannah since September 29. There is no doubt that this new disruption by Ian will further increase existing congestion.”

The CNBC Heat M Supply Chainap the data providers are the artificial intelligence and predictive analysis company Everstream Analytics; the global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; the logistics provider OL USA; the FreightWaves supply chain intelligence platform; the Blume Global supply chain platform; third-party logistics provider Orient Star Group; the marine analysis company MarineTraffic; marine visibility data company Project44; shipping data company MDS Transmodal UK; Ocean and Air Freight Rate Market Benchmarking and Analytics Platform Xeneta; leading research and analytics provider Sea-Intelligence ApS; worldwide crane logistics; and air, DHL Global Forwarding; freight logistics provider Seko Logistics; and Planet, provider of daily satellite images and global geospatial solutions.

#Ocean #freight #orders #signal #sharp #drop #consumer #demand

Leave a Comment

Your email address will not be published. Required fields are marked *