Q4 2022
In the first ten months of the year, global container volumes fell by 3.0%, according to Container Trade Statistics (CTS).
Though accumulated volumes have been down year on year since February, the pace of decline has accelerated in recent months.
September and October are the first months in which volumes are lower than in the corresponding month of 2019 since July 2020.
Year-to-date global container volumes are still higher than in 2019, but only by 2.5%.
Even if we do not consider the ups and downs of the past two years, demand growth of only 2.5% over three years is considerably lower than the trend growth experienced before the pandemic.
Real demand for container transportation work is falling faster than volumes would suggest, as the average distance from which containers are moved is also falling.
By splitting global demand into two groups, intra and inter-regional volumes, it is clear how the average haul is falling.
Volumes on the longer distance inter-regional trades have fallen by 4.1% in the first ten months of this year compared to 2021. Compared to 2019, container volumes on these trades are up by a measly 1.0%.
Volumes on intra-regional trades have also fallen this year compared to 2019. But they are down by only 0.7% and, compared to the first nine months of 2019, are up by 5.5%.
Another pain point in the overall demand picture is the faster fall in demand on fronthaul trades (eastbound transpacific -11.9% YTD) than on backhauls (westbound transpacific +0.4% YTD).
In October, volumes on fronthaul trades were down by 920 000 TEU (-13.3%) from October 2021, whereas volumes on backhaul trades were down by 240 000 TEU (-7.8%).
As fronthaul trades dictate the capacity requirements, the fall on these specific trades is more reflective of the transportation demand than the overall drop on all inter-regional trades.
This explains the high levels of blank sailings and outright service cancellations.
With reduced capacity due to lower fronthaul demand, backhaul legs will have a higher load factor than last year, but still not enough to drive higher freight rates.
The approaching holiday season offers the opportunity to take a look at a highly seasonal good that reflects the demand dynamics over the past two years and the bringing forward of imports that led to peak season being all but canceled this year.
US imports of Christmas lighting sets are typically heavily concentrated between September and October to allow retailers time to get them onto the shelves.
Last year total imports rose by 10% from 2020, hitting 170.4 million sets of Christmas lights.
But the peak in imports came much later than in a typical season, with almost 40% of imports only arriving in the US during Q4. The delay put enormous time pressure to get these goods into shops in the limited time frame when consumers usually buy.
This year, imports are down by 3.9% in the first ten months of 2019, with imports of these lights peaking in August, and falling steadily since then, as shippers ordered early to avoid the same problems as last year.
On a higher level, total containerized imports to North America have fallen by 2.9% in the first ten months of the year, with imports seeming to have peaked in July and fallen fast since then.
Reefer volumes year to date are down by 1.6%, less than 1m TEU moved in September and October, but not significantly different from last year. There are more nuances than with dry containers as to how demand for trade types is developing.
The biggest trade, intra-Asia, has grown by 1.7%, but so have several of the large long-haul trades.
For example, from South America to the Far East, volumes have risen by 17.3% in the first ten months of the year than in 2021. In contrast, exports from South America to Europe have fallen by 8.3%.
Overall exports of reefer containers from South America have risen by 0.7% from 2021. Also, reefer exports out of Europe have seen a split. Volumes to the Far East have fallen by 12.2%, while those to North America have risen by 3.2%. Freight rates for reefer containers are also falling, though not at the same pace as for dry containers.
From North Europe to the Far East, for example, spot rates are down by 11% from a year ago at USD 4 600 per 40’ reefer.
Long-term rates have, on the other hand, increased by 11% from a year ago and, in fact, rose again in October to USD 4 600 per FEU.
Reefer shippers can expect further falls in spot rates both on the long and the spot market as carriers adjust to their return to having to compete for volumes and with the competition between dry and reefer containers cooling right back down.
