Compared to previous years, the second half of the year is the peak season for the freight market, as the end of the year is the peak season for sales and many retailers stock up well in advance for the big day.
Earlier this year, many expected this period to put additional pressure on ships and container space due to the typical surge in freight volumes. However, this surge did not happen in June as expected and July got off to a weaker start than many in the industry had thought. This means that – as of the date of publication – there is available container space and sea freight rates on some trade routes have even started to fall.
While the past few years have made it very clear that the market can change at any time, there are several potential reasons for lower-than-expected freight volumes. However, there are other factors to be aware of when planning upcoming shipments. Importers should work with their logistics providers to discuss the current situation and plan accordingly.
What is affecting China sea shipping market?
Although shipping space is currently not as tight as it has been in recent months, importers need to understand why this is the case and how the market is likely to be affected in the coming months.
Russia-Ukraine war
The ongoing conflict in Ukraine could lead to delays for vessels in the future. Changes in consumer demand may also lead to changes in European freight volumes as the situation develops.
Port backlogs
As the global pandemic begins, the Port of Long Beach is making headlines with a record number of ships waiting to unload containers. This backlog has led many importers and their logistics partners to ship their cargo through other US ports, primarily on the East Coast. Those East Coast ports are now experiencing delays while ships are moving more smoothly through West Coast ports (although volumes are still high).
Rebalancing the normal flow of containers may take some time and could lead to other problems if the volume of cargo increases further.
China’s blockade
Blockades may occur with little warning as China has taken strict measures to prevent Covid levels from rising. When these measures come into effect, temporary factory closures, reduced shipments from factories to ports and lower factory productivity due to worker sickness could all lead to lower export volumes. Such reductions may make it easier to find space, but as we saw last year, prolonged or frequent blockades can lead to containers being stalled at ports and shipping companies may issue significant stoppages to help offset costs.
Reduced demand for household goods
Cargo on the TBED (Trans-Pacific Eastbound) trade lane consists mainly of household goods such as furniture and decorative items. With inflation on the rise, many shops dealing with backlogs and people spending less on goods, there does not seem to be as much demand for these goods as in recent years. This may be one reason why there is currently more available ship space than experts are predicting for this time of year. However, if demand picks up, capacity could be tight again.
There are many factors affecting the transport industry, but these are the main ones, so let’s hope that these next problems are alleviated.
