Global Shipping Update

Overhead view of dock crane unloading containers from a cargo ship

Logistics Market Update – November 2022

Logistics Market Update – November 2022 690 518 Transmodal

Here’s our November 2022 Logistics Market Update.

Earlier this month, an issue of the Global Port Tracker shared that retailers are not feeling optimistic. The prediction is that this month’s containerized imports will drop 9.2% in comparison to November 2021. Further, December imports are expected to drop 9% year-over-year, and this downward trend will continue through March 2023 at least.

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China’s zero-COVID policy continues to put pressure on its economy—which has slipped for the third month in a row. A senior economist from Caixin Insight Group states that “manufacturing activity was still way down by COVID-19 outbreaks,” and added, “both output and new orders saw further declines.” COVID restrictions prompted 200,000 Foxconn workers across a Zhengzhou complex called iPhone city to flee to escape lockdowns.

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In air freight news, the industry remains optimistic in the face of falling air cargo rates. Some levels have dropped to below 2021 rates and continue to fall. The good news is, they aren’t at recessionary levels yet. The industry hopes that demand will return in March, but no one is holding their breath.

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The drop in consumer demand is being felt around the world. Asia-Pacific airlines have seen a drop of more than 10% year-on-year in demand in September. The director general of the Association of Asia Pacific Airlines (AAPA) says, “The outlook for the cargo market remains subdued in the near term. Overall, the region’s airlines continue to face a challenging operating environment, with costs under pressure as a result of high fuel prices and weak local currencies.”

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For those who work on the high seas, the Delivering on Seafarers’ Rights progress report was published, thanks to the Sustainable Shipping Initiative. A progress report was written based on an October 2021 Code of Conduct and self-assessment questionnaire. The purpose of the assessment was to look into the welfare and rights of seafarers to identify areas where improvement is necessary.

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Row of trucks against a background of stacked containers

Logistics Market Update – October 2022

Logistics Market Update – October 2022 690 518 Transmodal

Here are some of the top global shipping news stories for October.

For the last several years, the norm has been to hear about port congestion on the US West Coast. However, West Coast ports are reporting their second month of decreased congestion. On the flip side, thanks to typhoons in the East, the ports in China and South Korea are experiencing rising congestion levels. In fact, levels were higher than they were during the pandemic.

Transit times were up by at least 25% in September at the ports of Qingdao, Busan, Ningbo, and Shanghai, with Qingdao experiencing an astounding 59% increase.

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In line with the above, CNBC reports a 20% drop in ocean freight orders throughout September and October. The reason is a drop in demand across many sectors, including apparel. The CEO of United National Consumer Suppliers explains that in part, the reason for the drop is many consumers shifting to off-price or discount stores like T.J. Maxx and Marshalls. That’s leaving retailers of more prestigious brands stuck with inventory.

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Labor at ports continues to be a global issue for supply chains. From October 11 until October 17, Port of Liverpool dockworkers were on strike—again.

Union officials took action because, in their words, the port operator refused to establish “sensible negotiations.” Instead, officials say the operator tried to intimidate its workers, which is likely a reference to an announcement made by Peel Ports saying that due to a deterioration in volume, 132 dockworkers were issued redundancy notices. South Africa is still dealing with a work stoppage and tensions are high at US West Coast ports.

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The outlook isn’t too merry as we head into the holiday shopping season in the US.

Retailers are still stuck with summer stock thanks to extreme weather events, ongoing labor issues, geopolitical problems, and continuing post-pandemic chaos. For holiday shoppers, this could mean that some retailers try to offload inventory at significant reductions instead of paying to store it—that’s the good news. However, in terms of items that are facing supply chain delays, you can expect costs to rise.

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The worldwide factory sector is experiencing increasing upward pressure thanks to higher energy prices.

The PMI states that for the first time in five months, September saw average input costs escalating at a faster rate than ever. According to data, supply chain and wage price pressures have calmed down, but energy costs remain at an all-time high. Companies reporting increased costs because of energy prices increased by 4.7 times higher than the PMI’s longest-run average.

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