Container Shipping outlook second half of 2022: Softer demand, lower freight rates, union disagreements, inflation, and geopolítical instability are on the horizon of the container shipping industry in the second half of 2022, according to Xeneta:
Despite the high levels of inflation in the US, Retail sales in the US are holding up and have posted strong results beyond levels before the Pandemic. Fewer products for the same amount of money paid by the customers do not affect the retail sales, which measure in value ($). Conversely, in container shipping, volume is considered value, thus fewer containers for fewer products.
Products like food and gas, which are not traditionally containerized imported goods have reported growth rates, in contrast to, containerized imported goods, which have a much smaller growth, in line with the effects of the current inflation, informs Xeneta.
A year ago, one-year long-term contract rates were more competitive than spot rates, thus, boosting contract rates by supply and demand. Currently, the spotlight is shed on the decreasing spot rates, which will disrupt the market.
In the long run, cargo volumes may decrease, but also, shippers may push above-average cargo volume through the spot rates upsetting container shipping lines that desire to move more containers into long-term contracts.
Nowadays, the gap between spot and tong term rates is narrowing. Plus significant volumes of full containers are still entering the US at the USEC, the Gulf Coast and the USWC. However, lower volumes for the second half of 2022 may be significantly lower than the ones reported in H1 2022.
Global volumes are currently down 1.8%. If the volumes of the second half fall below those of the first, a total decrease of 2.7% worldwide would be observed. The global economy constantly charged by inflatión and geopolitical tensions may impact the demand accordingly.
Disputes between unions and ports and terminals and geopolitical instability may impact the supply and demand for transport services. As well as, port congestions impacts the trsnsport service providers such as shipping lines, freight forwarders and shippers sat major terminals in the west coast of the US, the UK and Northern Europe.
Strikes of port workers in Felixstowe, United Kingdom, shortage of truck drivers in Bremerhaven, in northern Germany in addition to the low water levels on the Rhine River -slowly improving- , a shortage of barges and a forced decrease in on-board volumes place pressure on shipping capacity on land, river and rail.
Lastly, tensions such as the Russia-Ukraine war and the China-Taiwan tensions continue to transform the supply chains of the global trading routes.
Source: Xeneta
