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.
Read: October Freight Market Report
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.
