This summer is the period of deposition on shipping routes from Asia to Europe and many other routes…
The glimmers of hope of a traditional peak season, when retailers rush to stock up for the year-end shopping season, are fading.
According to CNBC, while retailers of goods ranging from textiles to electronics are having large inventories, demand for freight has dropped to a low level. This means that many ships have to wait near the wharf because there is no cargo to carry.
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MSC, the world’s largest container shipping line, was forced to cancel last week’s trip from Asia to Northern Europe on board the 366 meter MSC Deila, due to reduced demand on the route, the company said on its website. The vessel can carry 14,000 20-foot containers (TEU). Last week, another Deila cruise was canceled for the same reason.
“We are planning alternative services,” MSC said. At the end of July, the company also canceled the MSC Topaz voyage on the same Asia-Europe service.
“Ocean carriers are doing ‘capacity management’, i.e. keeping ships idle. If you fly to Singapore now, you will see a lot of ships waiting outside the port. Many of those ships want to wait until they are more productive to start running,” said Sanne Manders, director of air and ocean freight brokerage Flexport, to CNBC.
The situation of ships drifting off the coast took place in the context of a sharp decline in the profits of shipping companies. Last month, CMA CGM said its pre-tax profit in the second quarter of this year fell 73% year-on-year to $2.6 billion. Hapag-Lloyd’s pre-tax profit for the first half of this year fell to $3.8 billion from $10.9 billion in the same period last year.
Similarly, the shipping “empire” Maersk posted a pre-tax profit of only $2.91 billion in the second quarter, much lower than the record profit of $10.3 billion set in the same period in 2022.
In the next couple of months, the overcapacity in shipping will increase further. And that will put huge downward pressure on freight rates,” Mr. Manders emphasized.
After the Covid-19 pandemic, with excess money thanks to large profits, shipping lines ordered a record number of ships – according to a report from investment firm Bernstein. “The fact that the largest shipping lines add hundreds of thousands of TEUs to capacity will make it difficult for freight rates in the short and medium term to increase sustainably,” paragraph written in the report
“Ocean freight rates from Asia to Northern Europe have been facing significant downward pressure for more than a year now,” said analyst Niels Rasmussen of the Baltic and International Maritime Council (BIMCO). Sea container freight rates quoted by the Shanghai Ocean Shipping Exchange during the period from March to May this year fell by nearly 90% compared to the same period last year, Mr. Rasmussen added.
“In addition to weak demand, we see another important cause lies in the fact that ocean carriers are unable or unwilling to reduce their capacity to a level that matches actual demand,” the analyst noted. determined.
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Flexport has regular surveys throughout with retail customers about existing goods. “In the survey in March, 62% of the companies surveyed said that the amount of inventory is too much. In May, the rate was more than 40%. But by July, the rate was still above 40%. With such a large inventory, the need to import more goods is relatively modest,” Mr. Manders emphasized.
Mr. Manders added that the retail businesses of electronics, high-tech and fashion goods are very large, while the retail companies of furniture have a suitable warehouse. “Perhaps, we need the year-end holiday season to clear that inventory,” he said.
According to senior manager Simon Heaney of the shipping consulting firm Drewry, the work of container ships in flight is a fairly common phenomenon in recent years. “The container shipping market is in a period of declining demand, so diving is used as a method to rebalance the market. The large inventory, coupled with increased sales, is part of the reason for the decline in incoming shipping,” Heaney told CNBC.
Drewry recorded 13 container ships from Asia to Europe in July, so the number of ships for the same year was 18. The company forecasts the number of drunken ships in August and September.
According to Bernstein, retailers in the US had inventories worth $778 billion in May, the highest level since 2019. “Ning has what it takes for a peak season. for shipping,” the Berstein analysts identified.
Sources: vneconomy.vn