ONE’s Resilience Amid Market Deterioration
Ocean Network Express (ONE) unveils its Q3 report revealing a positive global volume growth of 6.5% year-on-year, against a mere 0.1% growth in the total market. This underlines ONE’s stronger market position even as the average revenue per TEU dropped by 64%. The report also highlighted an impressive eastbound Pacific performance with a notable increase in vessel utilization from 91% to 95% on the Asia-NAM headhaul, demonstrating ONE’s ability to navigate rough market waters.
Persistent Decline in East-West Contract Rates
The Drewry East-West contract index recorded a 2% decrease in October, marking its 13th consecutive monthly decline. The downturn has brought the average contract rates 73% lower than the previous year, reflecting a continued “buyer’s market” trend in the container shipping sector. This enduring deflationary trend in contract rates underscores the evolving dynamics of the shipping industry.
Stagnation in China’s Container Exports
China’s container exports exhibited a minor growth of 1.3% in the first nine months of 2023, indicating a pattern of imperceptible growth. The modest increase alongside discussions of shifting production out of China due to cost pressures and geopolitical tensions, signals a gradual loss of market share. Despite this, China’s absolute volume of container business remains stable, albeit at a slower pace compared to other regions in Asia.
The Transatlantic Westbound Woes
Westbound transatlantic ocean rates have plummeted to “unsustainable levels,” presenting a major concern for carriers like CMA CGM. The stark decrease in rates from $7,700 to $1,327 within a year highlights a dire scenario. The influx of capacity following the previous rate surge led to a devastating collapse in freight rates, further aggravated by rising operational costs. This situation calls for a re-evaluation of transatlantic services to mitigate the ongoing crisis.
Pacific Ports Regain Momentum Amidst East-West Coast Tussle
A significant shift back to Pacific ports has been witnessed as Asia-West Coast spot container rates outperform their East Coast counterparts. The resolution of labour issues, along with restrictions at the Panama Canal, has played a part in this maritime re-routing. The recent data indicating a 16.7% rise in West Coast volumes against a 13.4% fall in East/Gulf Coast volumes in September unveils a changing tide in the longstanding East-West Coast port rivalry, emphasizing the dynamic nature of import trends.
House of Shipping Insight
The undulating currents of the global shipping industry are manifesting in real-time through these recent developments. ONE’s resilience showcases a lesson in market adaptability, while the East-West contract rates decline reflects a broader economic narrative that demands attention. China’s growth stagnation could potentially herald a shift in global production dynamics, the transatlantic westbound distress is a bellwether for unsustainable operational practices, and the pendulum swing back to Pacific ports signifies the fluidity of maritime routes in response to multifaceted challenges.