Building on the market update of the 2023 first quarter, we continue to see shipping demand returning to pre-pandemic levels. Since June 2022, every month recorded less volume transported than in the previous four years.
While the macroeconomic and geopolitical situation remains highly complex, most of the factors that led to the surge in ocean freight in the last three years have dissipated. However, shipping data in March and April indicate improvement. The volumes of both months were very close to those of the previous year.
Global Capacity Development
Multiple container carriers have received orders for mega-sized boxships in the past few months. These orders were placed when the demand was at its peak. Now that the market has normalised, the orderbook of many liners seems a bit exaggerated. Overcapacity could become a reality if not balanced with sufficient demand.
Congestion and Schedule Reliability
Congestion decreased as an expected result of weak demand. This had a positive impact on the global on-time performance of container shipping. Schedule reliability levels reached 64.3% in June, a progress of nearly 24 percentage points compared to last year.
While this is encouraging, Kuehne+Nagel's Global Head of Sea Logistics Trade, Paolo Montrone, says, "In proper perspective in a market with much less congestion and bottlenecks compared to a year ago combined with high capacity and lower demand, still carrier networks operate with a ratio of 4 out of 10 vessels outside reliability standards."
Container vessels performed differently on each trade lane last month. The Mediterranean/Black Sea –South America had the highest schedule reliability among main trade lanes at 89%, and the Transpacific had the lowest rate at 52.6%.
In Conclusion…
As mentioned in the previous update, the levels of consistency and stability in the sector are relatively higher compared to the past two years. However, many experts remain cautious despite the apparent recovery.
Some of the "wild cards" mentioned last time have been realised in Q2. We have seen disruptions to the supply chain, especially in North America, due to strike action at major ports in Canada and the US. Drought conditions in Panama have also reduced the flow of vessels and the volumes passing through.
Disclaimer: This document contains forward-looking statements. We caution the reader that forward-looking statements are no guarantees of future performance. Past returns are no indication of future returns. The development of the industry and markets described in this document may differ materially from the forward-looking statement contained herein. Kuehne+Nagel or any of its affiliated companies make no representation as to the accuracy or completeness of any of the information contained herein and accept no liability for loss arising from the use of the information provided.
