The gloomy situation of global international shipping
The prolonged perspective of shipping industry
The global shipping industry has been facing such a complex scenario in recent years. After a long time surge in price, container rates are experiencing a substantial decrease as contract rates are moving closer to spot rates.Â
The drop-in containerized freight rate is evident in different regions, with noticeable effects in export hub regions like China and Southeast Asia. This significant drop is the consequence of dynamics changes in supply and demand, and the demand for shipping remains vulnerable due to global inflation and restricted demand.Â
An uncertain future still awaits the shipping industry, as there is low consumer demand in North Europe and the slow recovery of the Chinese container trade market, which suggest continued difficulties for the industry. Container prices and rates in mega hub ports across Asia, such as Ningbo, Shanghai, and Singapore have considerably dropped in the last year, indicating this situation may persist for some time.
The Chinese exports to different regions are in contrast: decline to the EU and US in 2022, while the container pick up to Russia is surging. The China shipping industry has recovered and recorded a trade surplus that keeps increasing. However, the trend in export growth slowed down as the year progressed. Unfortunately, the sluggish export growth will be a continuation for outbound containers trade.Â
Specialistâs viewpoint toward current container trade
Many specialists have viewed the shipping trend as a threat to global academics. Mr. Christian Roeloffs, CEO & Co-Founder, of Container xChange believed that this containerâs price decrease trend will impede economic growth and global trade. More than that, he indicates the lack of demand for long term commitments will affect the container market uncertainty. Despite demand for containers in Intra-Asia trade being better compared to other regions, the midterm outlook does not suggest an increase which was observed back in 2020 and 2021. Falling rates and shortage in container trade suggest a weak demand and slower economic growth.Â
Additionally, John McCown, a founder of advisory firm Blue Alpha Capital, indicates that the elastic container rates will change the market power to carriers in the long term. They will get more aggressive to cut back the capacity of their vessels.
In conclusion, the global shipping industry is still facing an unpredictable situation, with container rates collapsing, weak demand from inflation and a shift from trade routes (more increase in export pattern from China to Russia). It is difficult to witness the rebound of the current shipping industry, but the situation can be recovered in the future.
Contemporary China container pick up
 Sluggish market recovery in China container market
Container trade patterns and rates remain to be low. The recovery of Chinese container markets was influenced by Chinese exports which are below the expectation of bouncing back after Chineseâs new year. In October 2022, an oversupply of containers led carriers to seek ways to reduce their inventory. However, due to worldwide inflation and limited demand, there has been a significant decline in spot rates, contract rates, and container prices. The major Asia-US route has seen a sharp decrease in freight prices, dropping by 80%.
The statistics are not optimistic about container market pick up, a report from Container Xchange noted that shipping freights between Asia and the US on the West Coast and East Coast in January 2023 will be 11% and 84% lower, respectively, than in January 2020 and 2022.
The same situation also happens in North Europe where consumer demand is unlikely to recover soon. January 2023 witnessed the rates for picking up 20ft containers and 40ft HC containers from China to North European ports were low, averaging $861 and $823, respectively. Compared back to January 2022, the average pickup fee for a 40HC container on this same route exceeded $3,000. The prices of 20ft containers in the top three ports of Asia: Ningbo, Shanghai and Singapore all observed plunging with Ningbo decreased from $2,460 to $1,290, Shanghai from $2,370 to $1,270, and in Singapore went down from $2,410 to $1,240.Â
China shipping performance toward different regions
Low export performance between China container trade with US and EU
Despite all challenges back in 2022, China still experiences a trade surplus which grew 29.7% from the pandemic year. The export growth is large initially in the first quarter, but as the year progresses, it will particularly slow down when Interest rates were raised by central banks to combat inflation.  Â
All-time high record with Russia in shipping industry
The exports to Russia increased when Russia opened more trade routes with China. The exports index to Russia increased 8.3%. According to GAC, China's imports of coal and oil from Russia helped the two countries' goods trade reach 1.28 trillion yuan ($190 billion) in 2022, a 30% increase from 2021. Even though the ratio has increased in China-Russia trade, picking-up rate for leasing containers from Shanghai to Moscow has plunged from $2,425 in January 2022 to $832.
South-East Asia experience slump in containerâs pick-up
Southeast Asia also experienced a significant drop-in freight rate and container prices, the same as China. According to the statistics, the average container price fell by 32% Y-O-Y, from $3,798 in January 2022 to 2,590 in January 2023. Pickup fees dropped  by 78% from $311 in December 2022 to $67 in January 2023 and the average pickup fees on the South-east Asia-US trade route decreased by 6.38% in January 2023.
Conclusion
In conclusion, the China container trade market has been struggling with slow market pickup in recent times. Low containers pick up rates have affected international trade and the global economy. It is difficult to adapt to these uncertainties, therefore you will need DocShipper. We have expertise in dealing and consulting with shipping, sourcing, 3PL or moving. DocShipper was established specifically to redefine the international logistics process. Contact us to find out how we assist you.
