Global container demand collapses amid recession fears

The latest container volume figures from Container Trades Statistics shine a harsh spotlight on the ongoing collapse in demand in the sector.

September liftings of 13.5 m TEU mark a 9.5% monthly decline from August and an 8.5% annualised fall from September 2021. Year to date, volumes are now down 2.3% on the past year.

“The global market has clearly changed,” CTS said. “The release of market pressure is easing congestion in both ports and supply chains. The challenge for all watchers of the market is understanding where the next floor or normalisation will occur.”

On the Asia-Europe trade, volumes were down 18% month on month in September and down by over a fifth from the corresponding month in 2021.

Transpacific Asia-North America volumes were also sharply down, falling 16% from August and by 24.5% since last September.

September was traditionally a weaker month for exports ex-Asia, CTS said, and it was not clear whether the month-on-month declines would continue at the same levels as this month.

“The continuing global pressure on energy prices and commodities will continue and with it a knock-on impact on demand for container volumes,” it said.

While the collapse in volumes had to be seen in the context of last year’s record highs, an analysis by Sea-Intelligence of volumes carried and distances sailed, which gave a better picture of capacity demand, showed the issue was more deep seated than just a fall from peak volumes.

“In terms of TEU miles (the total of TEU carried multiplied by the miles of the collective voyages), demand declined a staggering -13.2% in September 2022 compared with September 2021,” said Sea-Intelligence chief executive Alan Murphy.

“And this is not just caused by a comparison to a potentially strong peak season in 2021. Compared with September 2019 before the pandemic, global TEU miles has declined -7.8%.”

The collapse in demand was a major driver of the downward pressure on freight rates, which saw CTS’ Global Price Index fall by 19 points, taking it back to August 2021 levels.

The latest data from the Shanghai Shipping Exchange shows spot rates were down another 6.5% last week, with Asia-Europe rates at $ 1,763 per TEU and Asia-US west coast at just $ 1,681 per feu. Both of these mark levels not seen since late 2020.

“Global demand developments in September can only be described by the word ‘collapse,’” Murphy said. 

“The very sharp contractions in both Europe and North American imports are pulling down global TEU mile growth and have served to dramatically exacerbate the overcapacity issues in the market. They have been key drivers in the rapid decline in spot rates as well.”

The concern now was that this decline was fuelled by a combination of an inventory correction and a global recession. Such developments might be expected to become even worse towards the end of this year.

“Blank sailings and reductions in service provision will counteract some of the price falls in the spot market eventually,” CTS said. “The key will be whether the long-term contracts survive this shock and provide some greater stability to both the shipper and the lines. It will be an interesting final quarter of 2022.”

But Murphy warned that carriers were already contacting customers to offer contract amendments, including lower contract rate levels. “This has clearly been done to safeguard the volumes available in the market.”