U.S. financial media CNBC reported on Monday (3rd) that logistics executives said that the sharp drop in consumer demand has been reflected in ocean freight, with orders for ocean freight falling 20% in September and October, with the decline in demand involving many products, including machinery, housing, Industry and Apparel. Logistics executives also pointed out that this was due to excess inventory and unclear consumer demand.
The shipping trend echoes the remarks of these logistics executives interviewed on Monday. Griff Lynch, executive director of the Georgia Ports Authority, expects numbers to decline in the coming weeks after witnessing the largest number of ships waiting to call in history.
In the apparel and footwear industry, executives said that there is no obvious downward trend in demand, but inventory problems are becoming more and more common. Among them, sportswear brand Nike (NKE-US) The latest financial report announced the excess inventory problem, which put pressure on its stock price . Brett Rose, chief executive of the United National Consumer Suppliers, said some merchants have high inventory levels as mass consumption habits shift further toward lower-priced items.
US freight and warehousing company SEKO Logistics also said that it has not seen a decline in demand, and pointed out that orders for expensive items such as smart parcel lockers, server integration racks, ultrasonic machines, and time-sensitive goods such as monitors are still strong.
DHL’s shipping department said it did not see any signs of a 20% drop in orders, but it did not expect a boom before China’s Golden Week holiday, and demand in October may be flat. In other regions, strikes by rail and port workers, port congestion in Europe and weather impacts could lead to more flight and port delays, offsetting lower freight rates outside the Asia-Pacific region.
Transporters resort to canceling ship shifts to prevent freight rates from falling
HSL Logistics said in a report that it has cut its fleet by nearly 50% and that the decline in capacity could continue into 2023 until demand picks up ahead of the Chinese New Year at the end of January.
However, it will take some time to stop the decline in freight rates. According to Freightos data, the Asia-US West Coast shipping price (FBX01 Daily) fell 8% to US$2,978/FEU (40-foot equivalent unit), which was 82% lower than the same period last year; while Asia – Freight rates on the US East Coast route (FBX03 Daily) fell 5% to $6,952/FEU, 63% lower than a year earlier.
At the same time, the Outbound Tender Rejection Index (OTRI) in the United States also showed signs of declining orders. The higher the index, the more orders, and vice versa.
FreightWaves director Kevin Hill said the number is now at 2019 levels, down 80% from a year earlier. From the perspective of excluding fuel surcharges, the current index is 31% lower than the same period last year.