After 2 years of shipping snarls, things are starting to take off

There has been improvement in how common goods are delivered to consumers. Although it took two years for this to happen, it is starting to go around the internet


In light of the current economic climate, many Chinese exporters are slowing their production in order to meet global demand for their goods. These factors, combined with a decline in global shipping capacity and increased inspections, are helping to ease disruptions that have been impacting ports for the past two years.


In the latest update, Christian Roeloffs, CEO of Container xChange, noted "the retailers and the bigger buyers or shippers are more cautious about the outlook on demand." These weeks-long delays in production have shrunk supply availability by 60 percent, with a direct result of reduced target sales.


With the congestion easing in some areas, waiting times have reduced and port capacity is less congested. Capacity that was previously held back is now released for cargo to start moving which frees up more space for business.


Port closures and congestion issues have been a problem for years now in China, but it looks like the problems are beginning to ease up. Shipping data has shown that China's exports are starting to slow down as Western economies shift their focus away from their local Chinese markets and the global economy becomes softer.


The reason for this change in container freight rates is still unclear, but evidence suggests the pandemic has played a role. Regardless, it appears that the container shipments between Asia and the U.S. have also dramatically declined as well.


As an opioid epidemic in the United States becomes more dramatic, it's been worrisome for small businesses earning significant profits on Amazon. This isn't because these companies are doing anything illegal; it's just because of the shifting market (and heightened risk).


"While port congestion remains high, the vessel waiting times are reducing," says Jerry Kronebusch."There is less capacity for cargo in the market, so the "turnaround" time for containers is waning."


The latest Drewry composite World Container Index — a key benchmark for container prices — is now $3,689 per 40-foot container. That's 64% lower than the same time last September. It's been falling for 32 weeks in a row and has sunk 32% since last year.


The current index is significantly lower than the all-time record prices of over $10,000 during the height of the pandemic.


A study by Drewry found that freight rates on major routes have fallen in the past 12 months. Costs for routes like Shanghai-Rotterdam and Shanghai-New York fell by up to 13%.


The decline in cargo traffic is in line with the sharp drop in container shipments that Nomura Bank has been observing.


When looking at data from U.S.-based Descartes Datamyne, Nomura said container shipments in September for all products except rubber products were down year on year.
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“Shipping containers are a direct reflection of how the economy is performing,” Nomura analyst Masaharu Hirokane said in a note on Wednesday. “The bank has yet to see most signs of a sharp fall in U.S. retail sales,” he added.


When Shanghai reopened after its recent lockdowns, plate throughput lifted but wasn't enough to offset the "wider downturn in port handling levels", according to data from Drewry.


There are many changes happening right now.


In Europe, sliding container rates reflect declining consumer confidence. We’ve seen a decrease in pre-booking and drop-down containers, which can show reduced demand for containers.


“The European market is experiencing a fall in the price of these 40-foot high-cube containers,” Container xChange reported.


It's been a tough two years for logistics companies. During that period, there were constant shortages of container shipments from the ports because of lockdowns and skyrocketing demand.


Containers have long been a popular choice for products in the beverage, food and pharmaceutical industries. However, companies that utilize them may soon be faced with one unfortunate trend: containers are becoming increasingly expensive and are less affordable for companies across various sectors.'


More containers are being idle at ports, as well as more automobiles. In particular, Andrea Monti, CEO of Sogese said that this problem is growing in importance.


Minke Whipple reported on a press conference of the Container xChange event in Singapore noting that containers are stacking up at a lot of import-led container ports.


The CEO of India's Arcon Containers has stated that China-based factories have stopped production for the foreseeable future.


"We heard four months," said the interviewer at Digital Container Summit conference.


"The container sector is being filled up in China, Europe, India, Singapore, and most parts of the world."


After two years of shipping complicated and difficult to sort snarls, things are starting to turn around.


After two years of shipping snarls, in some cases things are starting to turn around.


When port congestion and container shortages became a problem in earlier years, disruptions became worse as Chinese exports slowed and the global economy turned softer. Then, eventually, after two years of these problems easing, this tension is now easing as Chinese exports slow in light of waning demand from Western economies.


"The retailers, who are traditionally the bigger buyers in terms of volume, and shippers have been more conservative in their outlook on increasing their orders during this latter half of 2019," says Container xChange CEO Christian Roeloffs.


The congestions on the container ships have been greatly reduced, and the capacity in the market has been freed up.


China's export increases have slowed in light of waning demand from Western economies, according to a recent report by the country's customs. The downturn in global economic conditions has also significantly impacted growth.


Container freight rates, which soared to record heights at the height of the pandemic, have been falling rapidly and container shipments on routes between Asia and the U.S. have also plunged, data shows.


"The retailers and the bigger buyers or shippers are more cautious about the outlook on demand and are ordering less," Container xChange CEO Christian Roeloffs said in an update on Wednesday.


Traffic congestion has been easing along with vessel waiting times reducing, port operating at less capacity, and container turnaround times decreasing. Ultimately, this frees up the market's capacity to accommodate more cargo.


The latest Drewry composite World Container Index — a key benchmark for container prices — is $3,689 per 40-foot container. This is 64% lower than the same time last September after falling 32 weeks in a row, Drewry said in a recent update.


If we were to use the current index, we could find a price of $1,820.


Shipping rates have fallen, according to Drewry. This is great news for shippers since the cost of shipping has fallen considerably. Routes like Shanghai to Rotterdam and Shanghai to New York are included in this as well as other major routes such as London-New York.


Container shipments took a sharp drop in April, according to Nomura Bank.


The shipment of international containers from China to the United States for all products except for rubber and petrochemicals in September 2017 is down year on year.


"We assume that the sharp drop in container shipments largely reflects them stopping orders and reducing inventories due to their concerns over an economic slowdown," reports Nomura analyst Masaharu Hirokane, adding that the bank has yet to see signs of a sharp decline in U.S. retail sales.


When Shanghai opened after the recent lockdowns, traffic at the port increased but wasn't enough to offset the "wider downturn in port handling levels," Drewry noted.


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"The European market is finding itself flooded with 40-foot-high cube containers. As a result, the region is experiencing an apparent drop in prices."


Many companies rely on supply chains to ensure the accessibility of goods and services. These are not new trends, but they have changed significantly. More container shipments have taken longer due to lockdowns at ports and the increased demand from consumers.


But now, demand for containers is falling and so are their rates, Seacube Containers' chief sales director Danny den Boer said at the Digital Container Summit held earlier this month.


One of the major reasons for containers increasing in popularity is their ability to increase customer productivity and efficiency.


"Shipping containers are stacking up at a lot of import-led ports," said Gregoire van Strydonck, Account Manager of Container xChange at the conference. When shipping companies can't create profit, they often give containers away in order to free up space and cut back on costs.


India's Arcon Containers CEO Supal Shah said that China has stopped production for a foreseeable future.


At the conference, participants agreed to cut client wait time when agendizing work by half.


“There is, however, a lot of demand for storage units in China and Europe right now. These are by far the most popular markets and require a ton of supply to keep up with demand.”
The container depot space is full in China, Europe, India, Singapore and most parts of the world. 
In contrast, there is a lack of demand for storage units in North America, while they remain scarce in Japan.