We are almost at the end of the year 2022. A year in which we saw a very unpredictable market with a lot of ups and downs. It was the end of the pandemic and the start of high inflation. We saw all-time high and low records and now it is looking that it’s finally coming back to normal. In the middle of December, it is time to see what we can expect in 2023.
The expectations are that the market conditions, as they are right now with pre-covid rates and improving reliability, continue into the first quarter of 2023 with a high demand around Chinese New Year (January 22 – 27). We expect some challenges with capacity in the weeks following after Chinese New Year.
Due to the high inflation, Xeneta has asked their customers how they expect their 2023 ocean volumes in comparison with 2022. The results are as following: 42% of the customers expect their volumes to stay consistent in 2023 and 39% of the customers expect their volumes will decrease by 10% or more. The remaining customers expect their volumes to increase by at least 10% or decrease by 30% or more.
Normally we see an increase in rates around the Chines New Year. This year the rates stay relatively low. This can be explained by the full warehouses and overpriced stock at shippers. There is simply less demand than previous years, due to that the rates stay relatively low. Because there is a lower demand in production, we hear that some factories will send their employees home earlier with the Chinese New Year. However after the ending of this festive week in China (29th of January), everything will slowly go back to normal.
CAROZ’s eye opener: With high worldwide inflation widely recognised and containerised freight rates continuing to drop down, senior executives are expected to increase their focus on ocean transport savings. The reality today is that carriers are only willing to commit to longer term lower pricing in exchange for significant MQCs (Minimum Quantity Commitments). However, up to what extend will carriers be willing to commit to vast improvements on the low service reliability seen over the past 2 years? Caroz’s advice is to keep on track with a robust policy to find a perfect mix between cost, quality, and availability of service allowing a constant focus on continuous improvement rather than a constant discussion on price alone. As is often the case the devil is in the detail!
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Each monthly update we will highlight the developments within the Ocean freight market including the following topics:
- Trending topic
- Space & rate developments
- Port developments & congestion
- Freight Indices & Container Availability
- How to mitigate risks