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Navigating Digital Transformation: Insights from ODeX’s Ocean Freight Shipping Report

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Navigating Digital Transformation: Insights from ODeX’s Ocean Freight Shipping Report

ODeX, a prominent provider of digital solutions for ocean freight shipping, has unveiled a comprehensive report shedding light on the state of digital transformation within the industry. Drawing from a wide-ranging survey conducted by ODeX, the report offers deep-seated insights into operational hurdles, the adoption of digital documentation, and the evolving landscape of maritime logistics.

The survey, encompassing responses from diverse industry professionals, uncovers pivotal findings:

– 75% of respondents encounter operational bottlenecks frequently or occasionally, with documentation issues highlighted by 50% as a major challenge.
– 60% of industry professionals are already embracing digital documentation or payment platforms, indicating a notable shift towards digital adoption.
– Nevertheless, 40% have yet to adopt these digital solutions, primarily citing concerns regarding data security, user adaptability, and implementation costs.
– A significant 70% underscore the utmost importance of grasping the shipping landscape and stakeholders for successful digital integration.

The report delineates detailed recommendations for tackling these challenges, stressing the necessity for enhanced digital documentation, user-friendly platforms, and collaborative industry endeavors.

Liji Nowal, CEO of ODeX, emphasizes the survey’s significance, stating, “The findings underscore the urgency for action within the ocean freight shipping industry. As we navigate the digital transformation journey, it’s evident that a deeper comprehension of the sector’s unique challenges and a united approach are imperative. At ODeX, we are dedicated to propelling this transformation forward, ensuring that digital solutions not only address prevailing challenges but also pave the path for a more efficient and resilient future.”

This report serves as an invaluable compass for stakeholders in ocean freight shipping, accentuating the pivotal role of digital solutions in surmounting operational hurdles and augmenting industry efficiency. ODeX’s commitment to spearheading this initiative is underscored by the survey, reflecting its dedication to guiding the maritime industry toward a more interconnected and digitally advanced era.

The complete report is accessible on the ODeX website, offering a roadmap for industry stakeholders navigating the intricacies of digital transformation in ocean freight shipping.

import mach electronic shipping route import 7LFreight Expands Instant Cargo Pricing and Booking for North American Forwarders Across Both Air and Trucking  import container descartes automation

Rising Spot Rates and Container Demand Surge in the Wake of Red Sea Turmoil, ahead of the Chinese New Year

The Red Sea, a vital conduit for East-West trade, is undergoing unprecedented turmoil due to persistent attacks by Houthi rebels, causing significant uptick in fuel and insurance costs, longer voyages and capacity soak up for the transportation and logistics sector. 

Container xChange, an online container logistics platform for container trading and container leasing, issues a critical advisory as the Red Sea crisis deepens, impacting the landscape of global maritime trade.

Recent attacks by Houthi rebels have persisted on the Red Sea, with the most substantial assault launched on January 9, 2024, indicating a continued threat to maritime traffic in the Red Sea. 

Customers of the Container xChange platform affirm that the shipping lines have raised their slot prices significantly. A Container xChange customer based and operating in Singapore shared on the Red Sea matter that, “Average rate on China-Europe quoted this week is about US$5400/40’HC, up from US$1,500 (3X) just the week before.” 

Container trading spot rates shoot up by 48% in Latin America East in the last 30 days (as on 11 January 2024)

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Chart 1: Region-wise container spot rates 30 days delta as on January 12, 2024

Latin America (East and West), Japan & Korea and Europe Mediterranean witness highest increase in Container trading spot rates over the last 30 days.

“We foresee that the rate hikes will flatten out in the mid to long term. We have enough capacity which can be soaked up in longer transit times and yet not cause permanent capacity crunch.” said Roeloffs. 

Demand for Containers shoot up

There is a growing demand for containers in Asia as shippers and forwarders foresee cargo demand in the coming weeks, to fulfil orders ahead of the Chinese New Year. A container manufacturer from China shared with Container xChange, “Shipping companies are demanding more containers now as they avoid red sea. Therefore, Shipping companies and leasing companies have placed more than 750,000 TEU ISO container orders out of China in the last two months.”

Meanwhile, container trading spot rates are increasing at a staggering rate as observed on the Container xChange platform. Spot rates in Shanghai, Hamburg, Boston, in the illustrations below, indicate examples of the steep demand increase that is currently being witnessed for boxes in these hotspots. 

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Chart 2: Average container market price for trading in Shanghai
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Chart 3: Average container market price for trading in Boston

 

Chart 4: Average container market price for trading in Hamburg

As an immediate reaction to the disruption, these average container spot rates and prices are expected to rise, but then plateau after reaching a high. 

The container price sentiment Index (xCPSI), a sentiment tool by Container xChange to measure market sentiment for container price development, reached an all-time high as container price anticipation peaks. This indicates that the supply chain professionals are expecting these prices to further shoot up in the coming weeks significantly. 

Chart 5: Container Price Sentiment Index xCPSI 2023-24, xCPSI measures container price sentiment index concurrently amongst the supply chain professionals

The index value peaked at 71 in January from an average of 27 in December, mirroring the significant impact Red Sea attacks have had on prices so far. 

The Ultimate Cost Burden 

The two visible and obvious cost components that are leading to higher transport costs resulting from rerouting to Cape of Good hope are – insurance and fuel costs. 

Insurance for cargo transiting Red Sea has become challenging. On top of it, insurance costs have surged in anticipation of the difficulties and challenges that do not seem to taper off.

Another element is the fuel cost which has increased roughly by 20-23% by way of traveling through the Cape of Good Hope, as compared to the traditional Suez Canal route. 

“Ultimately, the final consumer pays the freight cost. In the short term, usually there is some intermediary that pays the bills, because they have promised at some certain price, but ultimately in normal circumstances, the price per unit is adjusted marginally to the end consumer when such a disruption occurs.” added Roeloffs.

Fine-tuning Inventory management strategies 

“There is always safety stock, that retailers keep, so buffer stock is there. Yes, it soaks up some capacity, but this event doesn’t have the capacity to impact inventory to an extent that we do not see products on the shelves. I don’t see that coming.” added Roeloffs. 

 The shipping and the global trade largely have become relatively more resilient to supply chain shocks as these become evidently more frequent and persistent. 

“As we witness continued disruptions disturbing the global supply chains in the mid to long term, we will see enhanced supply chain resilience.” added Roeloffs. 

The bulk, oil and gas sector have no impact so far whatsoever as the vessels carrying these continue to operate on the Red Sea. There has been no attack on these vessel types. High value container vessels are being diverted, impacting the big east-west trade from Europe to Asia and vice versa. 

So far, Out of 700, some 500 vessels have been diverted soaking up significant capacity from the existing overcapacity that the industry was grappling with. 

As businesses face this new challenge, there are three immediate recommendations that can improve the situation handling currently for companies-

  • Hold Adequate Safety Stocks: Maintaining sufficient safety stocks is crucial for absorbing disruptions without significantly impacting inventory levels.
  • Enhance Flexibility: Operating with multiple networks and suppliers adds resilience, reducing dependency on a single source.
  • Leverage Technology: Embracing technology is paramount for identifying problems in (or almost) real-time and making informed decisions, ensuring a proactive response to disruptions.

 Note of context:

In a troubling turn of events, the Red Sea, a vital artery for global maritime trade, is facing unprecedented disruptions, primarily due to recent attacks by Houthi rebels on ships passing through the region. The Red Sea, with its strategic importance accentuated by the Suez Canal, serves as a crucial superhighway connecting Europe, Asia, and Africa. Recent attacks have escalated operational costs, creating significant challenges for shipping industries and placing downward pressure on profits. The Bab el Mandeb strait, also known as the Gate of Grief, has become a focal point, and its geographical challenges make it a critical chokepoint for maritime traffic. The disruption is not only impacting the flow of goods but also leading to a substantial re-routing of vessels, resulting in increased shipping costs, longer voyages, and environmental concerns.

Impact Highlights:

  • Rerouting Challenges: Vessels are diverting around the Cape of Good Hope, leading to increased fuel costs, environmental concerns, and impacts on shipping efficiency.
  • Shipping Industry Strain: Shipping costs have surged, with a 60 percent drop in vessels passing through the Suez Canal.
  • Oil Tanker Stability: Despite disruptions, oil and fuel tanker traffic in the Red Sea remained stable in December, providing a glimmer of hope for stable energy supply chains.
  • Rising Shipping Costs: The Red Sea crisis is projected to push shipping costs up to 60 percent, coupled with a 20 percent increase in insurance premiums, affecting overall operating costs. 
  • Insurance Challenges: War risk premiums for shipping have surged, impacting transportation costs and potentially leading vessels to seek alternative routes.
  • Re-routing Impact: Re-routing through the Cape of Good Hope results in 10-20 days of delays, adding complexity to logistics and affecting delivery timelines.
  • Supply Chain Disruptions: The Red Sea crisis spotlights broader issues of supply chain disruptions, requiring strategic planning and forecasting by companies to navigate challenges.

As the Red Sea crisis unfolds, the global shipping industry faces unprecedented challenges, necessitating collaborative efforts and strategic solutions to ensure the resilience of supply chains and mitigate the far-reaching impacts on international trade.

 

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Navigating Global Shipping Challenges: Nexterus Guides Clients Through Red Sea Geopolitical Issues

Nexterus, a leading supply chain management and third-party logistics (3PL) services provider, is stepping up to assist international clients grappling with recent shipping challenges in the Red Sea due to geopolitical tensions. With container shipping companies diverting vessels from the Red Sea amid Houthi militant attacks, Nexterus is poised to guide clients in identifying alternative shipping routes for their goods.

Lisa Flohr, Director of Operations at Nexterus, underscores the significance of the Red Sea’s closure, a vital trade route, and its far-reaching consequences on the Transpacific trade lane. The company aims to provide solutions and opportunities for clients to navigate the evolving shipping market landscape.

Key challenges and impacts on international trade include restricted bookings on westbound routes, triggering freight rate surges and potential prolonged crises. The situation prompts a cascade effect, affecting regions such as the Middle East, Red Sea, North Africa, Europe, the East, the Black Sea, and the West. Notably, disruptions in one region can influence distant markets, emphasizing the interconnected nature of global trade.

The closure of the Suez Canal has compelled shipping companies to explore alternative routes, such as diverting ships around the Cape of Good Hope in Africa. However, this redirection poses challenges, including increased costs, extended transit times, and potential freight rate hikes. The decision-making process involves weighing suboptimal choices and navigating uncertainties, impacting the Eastern United States and global shipping dynamics.

The indirect effects on global shipping dynamics include an elongation of voyage distances when circumnavigating the Cape of Good Hope, leading to a subtle absorption of transportation capacity. Estimates suggest a 5.1%-6% reduction in global shipping capacity, equivalent to 1.45-1.7 million TEU. The crisis prompts strategic reshuffling, potentially affecting shipping schedules, freight rates, and the delicate balance of supply and demand on shipping lines.

Further challenges for the Eastern United States involve labor relations reaching a turning point, with discussions of potential strikes and labor negotiations. The timing of negotiations, concluding in August, presents a unique challenge for shipping companies, impacting the delicate balance between risks and rewards.

Amid uncertainties, Nexterus emphasizes the importance of seizing opportunities and staying informed on current events. The company commits to continuous updates and collaboration with clients to facilitate the movement of goods. As global shipping faces this “perfect storm,” Nexterus remains vigilant and aims to guide clients through the evolving landscape, emphasizing timely and reliable shipping amid shifting dynamics.

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Navigating the Red Sea Crisis: S-RM’s Gabrielle Reid Advocates Adaptive Shipping Strategies

As Houthi rebels continue to pose a threat to shipping routes in the Red Sea, global supply chains are experiencing disruptions, compelling half of all fleets to avoid this critical passage. This dilemma prompts shipping companies to consider alternative strategies, such as circumventing Africa’s Cape of Good Hope, despite its increased time and cost implications.

Gabrielle Reid, an Associate Director in the Strategic Intelligence practice of S-RM, a global corporate intelligence and cybersecurity consultancy, shares valuable insights into the Red Sea crisis and advises shippers on contingency plans. Her recommendations include rerouting options, adherence to best management practices, enhanced security protocols, and preparedness measures for potential confrontations with Houthi rebels.

Reid emphasizes the importance of adaptability in mitigating the impact on customers and maintaining global supply chain continuity. Shipping companies are implementing various measures, including optimizing other parts of the logistics chain and proactive communication with customers. However, Reid underscores the dynamic nature of global logistics, warning of potential consequences such as increased freight rates, longer lead times, and disruptions to supply chains, even with available excess capacity.

In terms of affected commodities, Reid notes that rising ocean freight rates will impact goods relying on the Red Sea corridor. Container shipping is expected to experience the largest rate increases, followed by bulk carriers and tankers.

Re-routing through the Cape of Good Hope, while a viable alternative, comes with significant challenges. The longer route, up to 10 days, results in delays, higher fuel consumption, and additional operating costs. Estimates suggest a one-third increase in transit costs from Asia to Europe, with shipping rates rising by 10 to 20 percent in recent days. Reid points out that shipping companies may need to absorb these increased costs or pass them on to consumers, potentially influencing commodity prices and causing ripples in global markets.

The article highlights the critical need for shipping companies to embrace adaptability and develop robust contingency plans to navigate the complexities of the Red Sea crisis, ensuring the resilience of global supply chains in the face of dynamic geopolitical challenges.

intermodal cargo shipping container import logistics chain port containers

Pressure on Box Owners in Europe to Reposition Containers to other Regions as Depots Flood with Empties

As the Euro Zone grapples with an ongoing economic crisis, facing declining trade and subsequently, a drop in container trade, the region struggles with the challenge of surplus containers causing repositioning costs exceeding the asset cost. Industry predicts that the container lessors are more focused on long term strategies so that the cost of repositioning may result extremely diluted over the asset lifetime. 

Exactly one year prior, in November 2022, Container xChange reported the persistently deepening problem of an excess of containers burdening depots across Europe. Fast forward to today, and the situation has continued to escalate.

“We have a poisonous mix of severely imbalanced container trade with high level of excess inventory in Europe, and at the same time unreliable shipping services, suddenly lacking the vessel capacity to reposition empties out which in turn makes the situation even more difficult” commented Christian Roeloffs, cofounder and CEO, Container xChange an online container logistics platform based in Hamburg, Germany. 

COVID aftermath in 2019, and later Russia’s war in Ukraine in 2022, left a permanent impact on EU’s trade with its major trading partners like China, the US, and UK. Subsequently, the imports and exports, both declined. 

Retail trade volumes and economic sentiment, both further declined for the Euro Area in 2023. While the final household consumption further declined, the household savings grew from 14.5% in Q1 to 14.9% in Q2 2023. 

With consumers retracting their expenditures persistently, and trade declining, this of course leaves its due impact on the shipping business in Europe. 

Ports in Europe experience consistent month on month low import and export volume TEUs. 

In the first nine months of 2023, there was 6% less throughput in the port of Rotterdam: 329.9 million tonnes compared to 351.0 million tonnes in the same period in 2022. The decline was mainly related to the throughput of containers and coal. The container segment saw a decline of 8.1% in weight and 7.2% in the number of containers (TEU, twenty feet equivalent unit) in the first nine months.

The import and export comparison are similar at the port of Antwerp and that of Hamburg. The biggest struggle for container owners in Europe is the persistent problem of excess containers leading to overflowing depots. The container owners are looking for solutions to repatriate containers back to China and to Russia. 

Source: xChange Insights

The excess of inbound containers this October is also evident in the Container availability Index (CAx) which measures the inbound and outbound containers at any given port. For Rotterdam, the values are at an all-time high at 0.70 this October as compared to 0.59 in October 2022. This indicates that the burden of containers is significantly higher in Rotterdam.                                                                                                                                                                                                                                   According to Drewry, In August 2023, the European Container Port Throughput Index saw a 0.4% MoM decline, reaching 100.2 points, down 2.8% dover the August 2022 level.

“Container owners are grappling with the issue of repositioning empty containers to Asia, and this task has become financially burdensome as repositioning costs now surpass the asset costs. However, the caveats here is that this could be an issue for operators looking for short term results, for instance, the traders. On the other hand, container lessors are more focused on long term strategies so that the cost of repositioning may result extremely diluted over the asset lifetime.” Commented Andrea Monti, Italian container depot owner Sogese chief executive Andrea Monti. 

While the carriers are looking to reduce capacity in this region, on the other hand we see the persistent blank sailings trend. In the next five weeks, 9% of 660 scheduled sailings on major East-West routes are cancelled. Most of these cancellations (52%) are on the Asia-North Europe and Mediterranean routes, with 35% on Transpacific Eastbound, and 13% on Transatlantic Westbound routes. 

“We do hear from our customers that depots are burdened, and the box owners are looking to move their containers to other regions. There is also a rush to reposition containers out of Russia and the prices there are quite low. With recessionary fears on the horizon in Europe, and specifically in Germany, the outlook for 2024 is shaky. But one thing is certain – 2024 will be better than 2023 for the container shipping industry.” Shared Christian Reoloffs, cofounder and CEO of Container xChange. 

The biggest uncertainty is the geopolitical risks that have been destructive for the supply chain industry. 

“The Israel – Palestine conflict have remained a regionally destructive humanitarian crisis and have not yet impacted the European Union’s trade and economy. Nevertheless, it is essential to recognize that the container market is highly sensitive to broader economic and geopolitical shifts, as these can substantially influence global trade. The ongoing conflict in Israel holds the potential to affect consumer confidence, manufacturing operations in the region, and ultimately trade volumes emanating from that area.” Roeloffs added. 

Amidst this, there are positive signs for container trade witnessed on the Container xChange platform. Russia is a very popular container trading and leasing market. 

“Hot stretches include 40 ft high cubes from Ex Russia to China and Intra Russia. The container prices are more stable now in Euro area and in China which brings cheer for box trading players as more stable prices gives way to plan the moves better.” Jakob Hafner, Business Unit Leasing & Trading, Germany, Container xChange. 

An overview of the container prices across key ports in Europe

Average prices for 40 ft high cube cargo worthy containers down by 44% this year in October 2023 from October 2022 across key ports in Europe, lowest in four years since 2020. 

Time Series Antwerp Hamburg Rotterdam
October 2020 1740$ 1690$ 1726$
October 2021 4132$ 4062$ 4108$
October 2022 2091$ 2216$ 2111$
October 2023 1005$ 1283$ 1248$

Source: Container xChange marketplace platform

Similar trend is observed for 20 ft DC, cargo worthy containers. However the decline is steeper for 40 ft HC containers, as compared to 20 ft DCs across ports in Europe. 

Time series Hamburg Antwerp Rotterdam
October 2020 1075$ 900$ 913$
October 2021 2546$ 2484$ 2388$
October 2022 1584$ 1612$ 1418$
October 2023 1140$ 945$ 615$

Source: Container xChange marketplace platform

Container xChange periodically deep dives into the container trading and leasing market trends to help equip its customers and industry drive better container business decision making. This analysis evaluates company and market information to contextualize solid understanding of the macro economic factors and draws correlation into how these are impacting the container market in the region. 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

 

 

demurrage D&D voyager

Focusing on Hidden Details can Save Charters Huge Sums in Demurrage Costs, Says Voyager Portal

Charterers can save hundreds of thousands of dollars of unnecessary demurrage costs by drilling down to the detail – and acting on what they find, says Voyager, the operations and demurrage management platform for bulk commodity shipping.

Two remarkable case studies demonstrate the value gained by customers using Voyager’s Statement of Facts (SoF) Parser and Demurrage Module. In both cases, hidden details in routine operations have been uncovered, leading to significant savings.

One customer is leveraging the Voyager technology to conduct root cause analysis of its port calls, specifically focusing on weather. At one specific port, the data showed that heavy winds were leading to an average two-hour delay per call – costing the company more than US$200,000 per year.

On reviewing its contracts, the company could see that delays due to weather were still entirely for the charterer’s account – even though it is common practice to share the cost of delays due to unforeseen weather conditions.

In the second case study, wasted time was the issue. SoF data showed that an ‘inspector/surveyor’ arrived at the side of the vessel at 13.15 and ‘gangway down’ was at 13.48, but ‘inspector on board’ was not logged until 14.15.

The time spent at the side of the vessel before coming on board might appear to be a tiny detail – but it represented US$625 in wasted time.

By using Voyager’s data and reports, the operator noted that the particular behavior of this surveyor, and of other providers, was happening for a significant portion of its voyages – costing an estimated US$137,000 over one year of operations.

The maritime sector is focusing intently on efficiency and cost optimization but one area that still has significant challenges is demurrage, said Voyager co-founder and COO Bret Smart.

intermodal cargo shipping container import logistics chain port containers

Container Market Sentiment Signals Rebound: A ‘Shipper’s Market’ this Peak Season

Container xChange, an online container logistics platform, published its August Container Market Forecaster today. Despite the ongoing market fluctuations, the Container Price Sentiment Index (xCPSI) has exhibited resilience and witnessed growth in July as compared to the month of June. The forecaster also noted that container prices have been relatively stable over the past 30 days (July) as compared to the previous 90 days (May-July).

Container Price Sentiment Index (xCPSI) by Container xChange
xCPSI survey for July 2023

The Container Price Sentiment Index (xCPSI) conducts market surveys concurrently and distils industry experts’ collective insights about container price trends into a quantitative measure, providing insight into near-future expectations for the container market dynamics. In July, 2,570 supply chain professionals participated in the survey. 

While the opinion is varied, still most respondents (42%) foresee an increase in container prices in the near-term which is indicative of potential market improvement, 28% foresee a further decline in container prices, suggesting a certain degree of pessimism in market conditions. 30% of those surveyed maintained that prices would remain unchanged. 

This growth in sentiment underscores the industry’s anticipation of an imminent turnaround, contributing a sense of positivity to the landscape.

Container Industry Stabilizing Amidst Market Fluctuations

Average container prices have been relatively stable in the last 30 days as compared to the price volatility over the past 90 days (30 days – July, 90 days – May-July). 

Analyzing a 30-day price delta comparison across key regions, the market has witnessed average price fluctuations ranging from -4% to +5.20% in the month of July 2023. However, the container prices have experienced a visible dip over a 90-day period, with Southeast Asia reporting a substantial -15.73% decline from May to July 2023. 

Despite this sustained dip, the sentiment index has stayed strong, even growing in July. The alignment of sentiment and pricing trends suggests an industry outlook that foresees a turning point, shifting away from skepticism towards a shared anticipation of market recovery despite ongoing price adjustments. 

container
Region-wise Container price volatility, Source: xChange Insights

Region-wise Container price volatility, Source: xChange Insights

Asian ports have been witnessing steady changes in average container prices for 40 HC cargo-worthy containers. For shippers, engaging in container trading or leasing within Southeast Asia at present, compared to three months prior or even just one month ago, presents a viable business prospect.

These average prices for 20 ft cargo worthy containers (region-wise) as of 9th August 2023 is illustrated in the graph below. 

container
Region-wise average prices for 20 ft cargo worthy containers

Region-wise average prices for 20 ft cargo worthy containers

Carrier Capacity Management Spur Intra-Asia Trade Surge

According to Fitch Ratings, in the second quarter of 2023, China witnessed a 6% year on year increase in total container throughput, a significant improvement compared to 3% growth in first quarter of 2023. This expansion was primarily propelled by intensification of trade under the Regional Comprehensive Economic Partnership (RCEP), introduction of new foreign trade routes at the Dalian port, and upward trajectory of trade with nations participating in the Belt and Road Initiative.

A surge in demand for containers on Intra Asia trade lanes was observed on the platform, for example, the China to India stretch was popular in the month of July on Container xChange. 

Here are the top five stretches for both the 40 HC and 20 DC containers Ex China on xChange Insights as on 10th August 2023 – 

40 ft HC 20 ft DC
China to India China to United States
China to Russian Federation China to India
China to China China to Russian Federation
China to United Arab Emirates China to Canada
China to Belarus China to United Arab Emirates

Leasing charges for 40 ft HC containers on stretches Ex-China are amongst the top 10 stretches on xChange Insights indicating a bounce back from low leasing pick up charges over the last months.

container
Leasing charges for 40 HC containers on prominent trade stretches

Leasing charges for 40 HC containers on prominent trade stretches

Indications from Drewry point towards Asia’s entry into a peak season, resulting in a notable 42% surge in the Shanghai-Los Angeles spot rate over a four-week period concluding on August 3rd. Simultaneously, the Drewry Shanghai-Rotterdam index also saw a 20% upswing within the same duration.

Due to increased trade between India and the wider Asian region, ocean carriers are adding more capacity on the Intra-Asia trade route. This is also propelled by the sourcing diversification strategy in South Asia, particularly in countries like Vietnam and India. The aim is to increase shipment volumes and improve market presence. These changes in strategy allow these companies to optimise their operations and potentially strengthen their market position. This is important in a dynamic and competitive shipping industry.

United States: A potential Industry Rebound

The Global Ports Tracker forecasts, provided by NRF (National Retail Federation), indicate that import cargo volumes are poised to reach their peak in August 2023. This surge aligns with retailers’ preparations for the winter holiday season stocking. 

Real GDP increased at an annual rate of 2.4% for the April-through-June period, after rising 2% in the first quarter this year, surpassing expectations and delaying concerns of a recession. 

The S&P Global Flash US Manufacturing PMI posted 49.0 in July, up from 46.3 in June indicates market improvement. A decrease of 0.5% in wholesale inventories also indicates that the inventories are becoming leaner in the US. 

“As economists shift from predicting recession to a ‘soft landing’, the industry holds its momentum. While some experts remain cautious, the foundation of a resilient economy, sustained consumer activity, and strategic federal investments improves the outlook of the upcoming holiday season.” shared Christian Roeloffs, cofounder and CEO, Container xChange

“It’s a shipper’s market this peak season as rates stabilize at below pre-COVID levels and capacity is abundant. Prices are low and this offers a great opportunity for exporters this peak season.” Roeloffs added. 

Eurozone Emerges from Technical Recession: A Turning Tide

In the second quarter of 2023, seasonally adjusted GDP increased by 0.3% in the euro area and was stable in the EU, compared with the previous quarter, according to a preliminary flash estimate published by Eurostat, the statistical office of the European Union. In the first quarter of 2023, GDP had remained stable in the euro area and had increased by 0.2% in the EU. Therefore, avoiding a technical recession in Eurozone. 

“Although we did avoid a technical recession in the Eurozone, retail trade is down by 0.3%, along with high inflation rate. These high prices will continue to exert pressure on operating costs for shipping companies. Carriers and freight forwarders should anticipate rising expenses related to provisioning ships and providing for crew members. Shippers might also experience increased costs for transporting goods, affecting overall supply chain costs.” Commented Roeloffs. 

“Short-term shipping demand may experience a boost, especially for routes connected to countries with stronger growth rates like Ireland and Spain. However, the potential for growth to be less robust than expected warrants cautious optimism. Prepare for potential shifts in shipping demand as companies explore more cost-efficient transport options during uncertain economic periods.” Added Roeloffs. 

The shipping industry’s course for the next few months is intricately woven with economic shifts, trade dynamics, and supply chain adaptations. As we approach the holiday season, the industry’s resilience and adaptability will be put to the test. 

traxens shipping

Traxens New IoT Device Leads Smart Container Requirements For Decarbonising Shipping

Traxens, the world’s first smart-container service provider for the global supply chain industry, unveiled today the new third edition of the Traxens-Box 3, its permanent container tracker and flagship product for shipping lines, freight forwarders and BCOs.

With the shift to green methanol-powered vessels and the increasing safety requirements of the International Maritime Organization, the Traxens-Box 3 IoT device has been completely redesigned to meet the highest level of ATEX certification on the market for explosion safety onboard ships.

Various shipping products are now being subjected to new explosion safety requirements as the shipping industry moves towards clean energy such as methanol-based fuel.

Added to the ATEX redesign, the battery life now reaches 7 years – an increase of 50% compared to the previous model. As a permanent container installation, this feature is critical to maximizing the device’s return on investment during a major part of the life of a container.

While focusing on risk management and cargo safety, Traxens continues to reinforce its main features for greater reliability. Traxens’ door opening detection, whose algorithms are constantly being improved, has already demonstrated its value in numerous cases, such as when consumer electronic goods have been stolen and when authorities have intervened timely after being alerted.

Several thousands of Traxens-Box 3 devices have already been pre-ordered by Traxens’ main customers who will start to deploy them in the following months.

The world’s top shipping lines, which are also Traxens’ shareholders, are already using the two previous versions of the device to convert their assets into smart containers, constantly communicating their location and additional status information.

About Traxens

Traxens has been driving digital transformation in the global supply chain for more than 10 years. The company’s breakthrough loT technology, data science expertise, global logistics experience and standards leadership unlock the value of real-time data generated from cargo assets shipped by sea, rail and truck. Traxens is trusted by hundreds of global cargo owners, enabling them to reduce door-to-door transport costs, optimize their operations and minimize risk. By partnering with the world’s leading shipping lines, authorities and insurance companies, Traxens helps all members of the global logistics supply chain ecosystem to reach a sustainable and optimized supply chain. Traxens is privately held and headquartered in Marseille, France.

intermodal cargo shipping container import logistics chain port containers

Global Container Market Forecaster – April 2023

The supply chain industry is hopeful of a better peak season this year and expects freight demand recovery in the Q2 of 2023, according to the recently published monthly container market forecaster for April by the online logistics platform, Container xChange

The container price sentiment index (xCPSI), a sentiment analysis tool by Container xChange that concurrently surveys supply chain professionals on their short-term price expectations, continued to show negative readings until mid-March. But the results consistently turned positive, reaching an all-time high at the beginning of April, when the index started showing confidence building for the coming quarter. 

 

While the industry sentiment is gradually turning positive, there have been many headwinds in the shipping sector in Q1. 

“The global container logistic ecosystem is like a spider’s web. One disruption does not linearly impact the knot. Instead, every disruption reverberates across the web—sometimes in unexpected directions. The increase in FED rates, the banking sector crisis, the strikes might seem concentrated in one region, but they have their impact across all trade lanes .” shared Christian Roeloffs, cofounder and CEO, of Container xChange as he commented upon the current state of the container shipping industry. 

Looking back at the first quarter of 2023

Overall, in the first quarter of 2023, North America registered the biggest decline in average prices for 20 ft dry cargo containers. After North America, the Middle East and ISC region witnessed the second biggest drop in container prices, followed by Southeast Asia. (See data below) 

Contract Negotiations in Q2 2023

Industry sources reveal that though the negotiations are due in May, shippers might delay these since the contract rates are still higher than the spot rates. So, the shippers are holding back to place themselves better during those negotiations. Another expectation is the reduction of contract tenures from one year to smaller time frames. 

Outlook 2023

Commenting on the outlook for the rest of the year, Christian Roeloffs shared further, “Despite avoiding a global financial and economic recession for now, the shipping industry is experiencing a freight recession due to the postponement of inventory replenishment cycles by retailers who overstocked. As we look ahead, we anticipate a subdued rebound in demand as retailers begin to deplete their excess stock in the coming months, leading up to the peak season.”

A survey was conducted recently (April 2023) with close to 664 supply chain professionals by Container xChange and asked how they perceived the peak season to develop this year in 2023 as compared to the last year. 

“This is an important time for NVOCCs and Freight forwarders who are diligently crafting their strategies to adapt to the current market conditions impacting consumer demand and freight demand. The anticipated changes in the industry, particularly after contract renewals towards the end of the first half of 2023, signal a crucial time for preparation. With cautious optimism, we foresee that this year’s peak season will be better than the previous year, as we leverage our experience and industry insights to navigate the challenges and capitalize on the opportunities that lie ahead.” commented Harry Duong, Pudong Prime, an international freight forwarding company, while sharing about the company’s forecasts for the rest of the year.

The industry is hopeful that the pent-up freight demand will be propelled by the beginning of the retail inventory replenishment cycles in the quarter after a slump in demand and overstocking by retailers. 

The Southeast Asia Story

Southeast Asia has emerged as a strong economic “partnership region” as the world looks to a more diverse sourcing and manufacturing trade strategy.

“The diversification of trade will prove to be beneficial for ocean trade because this will cause a boom to the regional trade within Asia. It will also lead to more locations adding to the direct trade from the region to North America or to Europe. So, diversification will play a role and in general, this will soak up more capacity than what we would have had on transpacific China to the USA or China to Europe alone.” shared Christian Roeloffs.

According to the Vietnam Customs data, Vietnam’s two-way trade in February was up almost US$3 billion over January despite February being a slightly shorter month. On the other hand, China’s exports to the EU totalled RMB 552.837 billion from January to February 2023, a year-on-year decline of 5.0%. 

According to the 2023 Container Shipping Outlook by Alix Partners published in March 2023, “Bangladesh, Malaysia, and Vietnam are already eating into China’s share of consumer goods exports and foresee China’s position eroding further as nearby countries increase their shares of supply chains and as government policies and business strategies outbound momentum. Mexico and Eastern Europe stand to gain over the medium term as more and more volumes shift out of China and to neighbouring countries.”

For more analysis, container market trends and forecasts, visit our product ‘Insights’ https://bit.ly/3TysMrT 

 

vessel accident february

February Decrease Keeps 2023 U.S. Container Imports on 2019 Path

Descartes Systems Group, the global leader in uniting logistics-intensive businesses in commerce, released its March Global Shipping Report for logistics and supply chain professionals. The report shows February 2023 U.S. container imports decreased significantly from January 2023 but remained aligned with pre-pandemic 2019 volumes. Despite the reduction, port transit delays increased for the top West, East and Gulf Coast ports. Chinese imports followed the downward trend along with the rest of the top countries of origin. COVID continues to be a factor from ports of origin and the West Coast labor situation has still not been sorted out. The February update of the logistics metrics Descartes is tracking shows some consistency with pre-pandemic import volume seasonality but continues to point to challenging global supply chain performance in 2023.

February 2023 U.S. container import volumes decreased 16.2% from January 2023 to 1,734,272 TEUs (see Figure 1). Versus February 2022, TEU volume was down 25.0%, but only 0.3% lower than pre-pandemic February 2019. Two points to consider with the February numbers: 1) February has 28 days versus 31 for January and 2) With the Chinese Lunar New Year holiday occurring in January 2023, its impact on container import volumes would be seen in late February and early March 2023.

Figure 1. U.S. Container Import Volume Year-over-Year Comparison

Source: Descartes Datamyne™

“Examining imports from January and February in the previous six years, February 2023 volumes would have been expected to be significantly lower than January 2023 (see Figure 2),” said Chris Jones, EVP Industry at Descartes. “Declining container import volumes but rising port transit times demonstrate that, while 2023 volumes resemble 2019, global supply chain performance could remain uneven in 2023.”

Figure 2: January to February U.S. Container Import Volume Comparison

 

Source: Descartes Datamyne™

The March report is Descartes’ twentieth installment since beginning its analysis in August 2021. To read past reports, learn more about the key economic and logistics factors driving the global shipping crisis, and review strategies to help address it in the near-, short- and long-term, visit Descartes’ Global Shipping Resource Center.

About Descartes

Descartes (Nasdaq:DSGX) (TSX:DSG) is the global leader in providing on-demand, software-as-a-service solutions focused on improving the productivity, performance and security of logistics-intensive businesses. Customers use our modular, software-as-a-service solutions to route, schedule, track and measure delivery resources; plan, allocate and execute shipments; rate, audit and pay transportation invoices; access global trade data; file customs and security documents for imports and exports; and complete numerous other logistics processes by participating in the world’s largest, collaborative multimodal logistics community. Our headquarters are in Waterloo, Ontario, Canada and we have offices and partners around the world. Learn more at www.descartes.com, and connect with us on LinkedIn and Twitter.