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Chinese containerised exports for February were a miserable $418m compared to $551m in January and nearly $1bn in February 2022. Even accounting for the Lunar New Year, this was a depressing number for Chinese exporters who will be hoping, as their factories reopen, for more buying from US customers this year. US liner industry analyst John McCown writes in his March 2023 report that the top 10 US container ports’ February throughput of 1.45m teu declined by a monthly record 28% after a 17% fall in January. February was the fifth consecutive month of double-digit declines. McCown expects this trend “will continue for a few months at least.” Predictably, west coast port throughput fell further by 37% than east coast and Gulf port throughput which was down 19%. McCown notes that the US inventories to sales ratio, as reported by the US Census Bureau, rose 11% month-on-month in February pointing to a slow-down in consumer spending. Source: The McCown Report, March 18 2023 Trade between the US and China faces more headwinds as the Biden administration has told the Chinese owners of TikTok (a social media app) to sell their stake in their US after two years of talks have not persuaded the US side that the app is not a danger to national security (let alone sanity). TikTok’s owners say that a sale would not protect user data and certain Chinese wolf-warrior diplomats warn that a US ban on TikTok could lead to tit-for-tat disinvestment and product bans in both countries, further reducing bilateral trade. In Europe, empty shipping container inventories continue to grow as weak demand for them in China leaves them unemployed. Container xChange says a surplus of up to 5m teu is leading to congestion bottlenecks and space shortages as ports, warehouses and storage yards as liner companies cut services or cascade Asia-Europe ships onto regional trades. Liners are trying to sell surplus boxes, leading to a fall in leasing rates and prices. A measure of the lack of import demand in the EU is its trade deficit for goods which fell from €13.4bn in December to €11.4bn in January as imports declined 1.8% to €253bn. The lack of trade is reflected in the number of idle ships which has grown to 4.1% of the fleet, or 1.01m teu, having doubled in a year, basis Drewry data. A number of idle ships are to be found around the Chinese coast, leading to speculation that their owners are taking the opportunity to retrofit efficiency-gaining kit such as propeller bosses, main engine limiters, and even batteries or fuel cells for auxiliary power. The out-turn for container freight markets is unsurprisingly negative. The Freightos Baltic Global Container Freight Index stood at $1,492 per feu on March 24, down 25% from $1,984 a month earlier and down 84% from $9,430 a year earlier. Transpacific shipping costs slid further in March to $1,016 compared to $1,164 a month earlier. The decline has slowed but only because there is so little downside left before lay-ups and time charter renegotiations eat away further at supply. On the main headhaul Asia-North Europe route, freight rates ended February at around $2,600 but have halved in the first 24 days of March to around $1,385. Rates from Asia to the Mediterranean bucked the trend, rising from $2,755 on March 10 to $2,888 on March 24, which only restores them to their level on March 6. As per a previous monthly note in these pages, smaller ships that are deployed on Asia-Med can be redeployed more easily than the big ships that trade Asia-North Europe, giving the lines more supply management option and better pricing capability on Asia-Med. In the Atlantic, westbound rates from North Europe to US east coast slipped under $4,000 per teu level in March to $3,890 on March 24, about a fifth lower than their February 24 level of $4,957. The eastbound backhaul has suffered from eurozone weakness in March, stalling a small gain in the first half to nestle at $418 on March 24, compared with $472 on February 24. In the English nursery rhyme, the Grand Old Duke of York marched his 10,000 men up the hill then back down again. Today’s freight analysts may be singing their children to sleep with similar lullabies about containerised freight rates.

Containers: The Grand old Duke of York

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