The shipping industry in China and Southeast Asia is facing a challenging period, with dropping container rates and weak demand caused by global inflation and restricted demand. The long-term forecast for the shipping industry is uncertain, with low consumer demand in northern Europe and slow market pickup in China indicating difficult months ahead. The declining container prices in ports across Asia, such as Ningbo, Shanghai, and Singapore, suggest that the current climate may not change in the near future.

The decline in exports to the US and the EU in 2022, coupled with China’s increased trade with Russia, could also lead to altered trade routes. China recorded a trade surplus in 2022, mainly due to export growth in the first quarter, which slowed over the next three quarters of the year. Container xChange forecasts that the slow pace of exports and outbound container volumes are expected to continue into the first quarter of 2023.

The current market outlook for the shipping industry appears bleak, with container prices and leasing rates plummeting. The global shipping industry is witnessing a freefall in container rates, and blank sailings have not been able to control the sliding prices. The mid-term outlook for the industry indicates a slowdown in container trade on Asia to EU and Asia to America trade lanes. Contract rates are closer to spot rates, indicating the lack of demand for long-term commitments, which can be attributed to market uncertainty.

Intra-Asia trade is showing some resilience, with comparatively better demand for containers. However, the mid-term outlook does not project demand to rise to the heightened levels witnessed in 2020 and 2021, except for a possible inventory replenishment cycle that may bring about some demand for containers. The falling rates and increased availability of containers in certain regions of the world are indicative of weak demand and slower economic growth.

The oversupply of containers led to carriers wanting to offload their inventory by October 2022. However, global inflation and restricted demand led to a sharp drop in spot rates, contract rates, and container prices. One major Asia-US route experienced an 80% decline in freight prices. Asia-US West Coast container rates were 11% lower in January 2023 compared to January 2020, and Asia-US East Coast rates were 84% lower than in January 2022.

According to Container xChange, consumer demand in North Europe is unlikely to improve soon. The average pick-up rates from China to ports in North Europe remained low. Container rates for 20-foot boxes averaged $861 and 40ft HC rates averaged $823 until January 2023. In January 2022, the average pickup charge for a 40HC on the same route was more than $3,000.

The prices of a 20ft cargo-worthy container in the top three ports of Asia – Ningbo, Shanghai, and Singapore – have significantly declined between January 2022 and January 2023. The average price in Ningbo decreased from $2,460 to $1,290, while in Shanghai it fell from $2,370 to $1,270, and in Singapore it went down from $2,410 to $1,240.

The shipping industry in China and Southeast Asia is facing a tough time, with weak demand, dropping container rates, and an uncertain long-term outlook. The falling rates and increased availability of containers in certain regions of the world are indicative of weak demand and slower economic growth. The mid-term outlook does not project demand to rise to the heightened levels witnessed in 2020 and 2021, except for a possible inventory replenishment cycle that may bring about some demand for containers. The current market outlook appears bleak, and it remains to be seen how the industry will adapt to these challenging conditions.