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65% of freight forwarders confirm Q2 2023 ‘business slowdown’ from Q1 2023
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64% of forwarders polled in July hopeful of business revival, 15% unclear, 21% downbeat
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In June 2023, container prices reached their lowest average versus June 2022 and June 2021 in key supply chain markets including China, Europe, and US
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Shipping enters Q3 with steady rate fall amid negative sentiment ahead of “invisible peak season”
Results of a recent survey of freight forwarders by Container xChange confirm a business slowdown as shipping rates continued to fall in the second quarter of 2023, but the respondents expressed hope for better demand when the peak season comes.
The survey also shed light on forwarders’ expectations for the future with 64% looking to business improvement, while 15% were uncertain, and 21% were downbeat.
The poll highlighted a concerning trend in container prices. In June 2023, the lowest average box prices were seen in key supply chain markets such as China, Europe, and the US, compared with June 2022 and 2021, said Container xChange. The price decline could indicate a further strain on profit margins for shipping companies.
Container xChange, an online container logistics company, studied how the shipping industry and container movements fared in H1 2023.
“The year 2023 started with significant oversupply of containers and high uncertainty in the market – which led to substantial rate erosion. The average container prices have been freefalling and there are no signs of revival as we approach the busiest period in the shipping industry. It is quite evident that the peak season is almost invisible,” said Christian Roeloffs, cofounder and CEO of Container xChange.
A study of how average prices for new and cargo-worthy standard containers developed in Q2 2023 (April-June) shows most of the regions saw price slides or marginal price rises. In Q2, there was no significant uptick in average prices for both new and cargo-worthy containers.
A lookback at the Q2 2023 average container price development on key routes shows only Northern Europe, Middle East and the Indian subcontinent saw a marginal rise in prices, the rest being negative for standard containers, the analysis said.
As the world looks up to America for consumer demand amid rising prices, inflation and wage wars, there are no signs of revival in average container prices. “This in turn leads us to think that the demand for cargo or the need to reposition empties back to Asia is no longer pressing in that region,” Roeloffs said.
Container xChange said it had asked the freight forwarders globally if their businesses slowed in Q2 2023 as compared with Q1. Around 65% affirmed business was hit in Q2, while 19% confirmed their business remained the same with no uptick. Only 16% said their business was higher than before.
When Container xChange asked if they expect business to pick up as the peak season approaches, 64% confirmed they do expect an uptick and 21% said they do not expect a business boost. Some 15% said they are unsure due to so many disruptions that have clogged the view.
Another indicator of subdued expectations for the coming invisible peak season is that the majority of freight forwarders confirmed they saw a decrease in customer demand and customer activity in June.
The shipping industry had high hopes of a return to normalcy at the beginning of the year as China emerged from COVID lockdowns. Container xChange’s Chinese New Year report in February 2023 indicated that container prices were stabilizing, raising expectations of a revival after a prolonged price lull.
Shipping rates, however, continued to decline as demand remained weak, the global economy was heading for a recession, inflation was keeping consumers from spending. These factors only served to prolong the rate slide and dash hopes of a turnaround.
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