While the world gets on with life post-pandemic, the shipping industry continues to untangle and weather the storm of subsequent price corrections.
According to the ACCC’s Container stevedoring monitoring report for 2022, the global vessel schedule reliability rate bottomed out in January 2022 and has slowly recovered since.
However, at just above 50% in September 2022, it has yet to return to pre-pandemic levels above 70%.
The second half of 2022 also saw a significant fall in spot container freight rates, as noted in the Seatrade Maritime Podcast.
So, the question remains: how will these metrics among others recover throughout 2023? And what can Australian businesses do to manage continued price volatility and declining volumes?
Freight Rates & Contracts Rates
The Seatrade Maritime Podcast states that spot container freight rates have now dropped much lower than contract rates.
This sets the scene for 2023 when contract rates will drop to meet the former, according to Maritime Strategies International (MSI) analyst Daniel Richards.
“A high proportion of contracts will come up for renewal in the first half of next year, and it’s clear that the lines are going into that renewal season, not on a great footing,” Richards said.
“Blank sailings aren’t yet proving to be as effective at all as they were in the early stages of the pandemic. So now the spot rates have led, it’s likely the contract rates will follow.”
Post-pandemic Pricing
After the frenzy of demand experienced during 2021, as consumers ramped up their eCommerce activity, 2022 saw a decline in volumes and pricing soon followed.
It’s expected this trend will continue in 2023, as the Freight Trade Alliance director Paul Zalai told the AFR.
“Freight rates globally have come down considerably since the peak of the pandemic when high demand and congestion at major international ports caused major disruption,” he said.
The FTA has suggested that prices from China to Australia are a key indicator of wider market forces.
Managing Future Volatility
Industry bodies are calling for greater investment in shipping and port infrastructure to add adaptability and resilience into the industry to protect the system from future supply chain shocks.
The United Nations Conference on Trade and Development (UNCTAD) released a statement in late-2022 which called on countries to assess the potential for change in shipping demand and update their capacity accordingly.
“If there is one thing we have learned from the crisis of the last two years it is that ports and shipping greatly matter for a well-functioning global economy,” said Shamika N. Sirimanne, director of UNCTAD’s technology and logistics division.
“Higher freight rates have led to surging consumer prices, especially for the most vulnerable. Interrupted supply chains led to lay-offs and food insecurity.”
The organisation recommended bolstering port connectivity, expanding storage and warehouse space and capabilities, as well as minimising labour and equipment shortages.
How can AFS Logistics assist?
Our strong network of Global partners and our experienced Global Team provide our customers with up-to-minute advice on managing their international supply chains in the most cost effective and efficient manner. From end-to-end sea freight and air freight procurement to customs clearance and compliance our team of experts can help you the whole way.
For more information about this or any other trend in the shipping industry, get in touch with our friendly team.
