Global shipping congestion? The truth is exposed! These industries have been hit hard。

Since last year, the global central bank has entered a cycle of interest rate hikes, and high interest rates have made the economy rapidly reverse, resulting in a downturn in the container shipping industry, which was in considerable demand during the epidemic, not only the situation of flight cancellation, but also a number of ships stranded in the port, because it needs to spend more time collecting goods and waiting for better returns.

According to CNBC, this summer has been quite painful for routes from Asia to Europe and beyond, and hopes for the third quarter, the traditional peak season, are fading. According to the data, 13 sailings have been canceled or delayed so far from July, which will be difficult to ease in the coming months.

Mediterranean Shipping (MSC), the world's largest container shipping company, said on its website that it had to cancel the Asia to Europe voyage of a 14,000 TEU vessel MSC Deila due to slowing demand, and that it was arranging alternative plans to resolve the problem. This is not the first time MSC has cancelled a voyage, as it did in late July.

Maersk announced on the 24th that in order to better cope with demand fluctuations, it will cancel the "MDV 164/337N" voyage of the TP route from Asia to North America on September 12 from Xiamen.

Excess capacity! Weak demand for goods in Europe and the United States:

"Shipping companies are doing capacity management, which means ships are being held up," said Sanne Manders, president of Flexport Sea and Air. "If you go to Singapore, you'll see a lot of ships in the port and they're waiting for better yields."

At the same time, the demand of major economies in Europe and the United States is weak, and the quantity of goods is not long to improve.

Taking the US cargo volume data just past July as an example, according to the data, total seaborne imports in the United States fell by 12% year-on-year, by 10% compared to 2021, and by 1% compared to the same period in 2019 in a normal year. Different regions are affected to different degrees.

East Asia, the main source of imports to the United States, fell by 15 percent year-on-year, a significant decline. This is mainly because China accounts for the largest share of East Asian countries, and China's seaborne cargo volume is declining. Even compared to 2019, shipments in East Asia fell by 9%.

The second largest region, Southeast Asia, was affected by destocking in the United States, falling 4 percent year on year, but the decline was much slower than the overall market. What is different is that this is a 31% increase compared to the same period in 2019, once again proving that the Southeast Asian region has been the biggest beneficiary of the US market over the past four years.

Although Western Europe ranked third, the volume of goods fell by 8% year-on-year, a year-on-year decline, and may soon be surpassed by South Asia, which ranked fourth. This is mainly due to the higher production costs in Western Europe, which are difficult to maintain at a high level.

On the contrary, for geopolitical reasons, South Asia became the second largest beneficiary region after Southeast Asia to benefit from the United States' "de-risk" policy, although the volume of goods decreased by 12% year-on-year, but increased by 23% compared to the same period in 2019.

Investment agency Bernstein mentioned that shipping companies invested heavily in increasing capacity during the epidemic, but now the industry is sluggish and overcapacity, and freight rates are difficult to rise in the short and medium term. Analyst Niels Rasmussen said that during the trough of container shipping in March to May this year, the price has been slashed by nearly 90% compared with the same period last year.

The road to destocking is long, and the peak season is difficult to see! These industries have been hardest hit:

Sanne Manders, Flexport's president of ocean and air freight, also said too much inventory in various industries was another major reason. "There is too much inventory in the high-tech, electronics and apparel industries. There is moderate inventory in furniture companies, and it may take some holidays to eliminate inventory."

According to Commerce Department data, retail inventories of goods that account for the bulk of seaborne imports - furniture, home furnishings, appliances and appliances - fell 11.7 percent in June from a year earlier. Despite this, the amount of inventory is still 8.6% higher than in June 2019. Wholesalers' inventories of appliances, appliances and electronics have only recently begun to decline. If current sales hold steady, albeit with some uncertainty, inventories would need to fall by a further 17% to return to pre-pandemic levels. Wholesaler inventories in the clothing industry face a similar situation. While down 11.7 percent from the peak in 2022, even with current flat sales, inventories would need to fall by 32 percent to return to pre-pandemic levels.

From the perspective of inventory levels, the retail industry has made some progress in destocking. However, due to a lack of confidence in future consumption, retailers have no incentive to restock much, which is one reason why there has not been a significant peak season this year. At the same time, wholesalers' inventories are still high, and with absolute inventories higher than in 2019, the ratio will remain high once current consumption begins to decline. As a result, wholesalers will not increase imports on a large scale.

High season is hard to see!

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