Global Port Activity Slumps to 3-Year Low

Date: Friday, March 24, 2023
Source: Sourcing Journal

Global port activity just keeps plummeting. And with the Lunar New Year out of the way, experts believe February container volumes will come in even lower than they usually are.

In January, total global port throughput slid 4.5 percent year over year and 2.6 percent month over month to an index of 109, according to the Drewry Container Port Throughput Indices. This marks the lowest month of cargo volume worldwide since June 2020, when the index was 98.1.

But February, already a traditionally weak month as factories throughout China shutter for two weeks to celebrate the holiday, is projected to see an even bigger drop amid slowing demand for transported goods. Port throughput in the month is expected to slip 8.9 percent annually and 5.6 percent on a sequential basis to 95.2—both of which would mark the highest individual drops since the start of the Covid-19 pandemic.

Unlike previous years, the anticipated February throughput totals come after a steady drop in the months prior. While February 2021 and 2022 saw 2.4 percent and 1 percent month-over-month declines, respectively, they both came after January saw brief spikes in port traffic.

This is not the case to kick off 2023, in which seven of the past eight months have seen a decline in activity at the more than 340 ports monitored by the indices.

In fact, after the port throughput index peaked in June 2022 at 112, volumes have sunk 15 percent.

Drewry calculates its Container Port Throughput Indices as a series of calendar-adjusted volume growth/decline indicators based on monthly throughput data, representing over 80 percent of global container volumes.

This “nowcasting” model uses vessel capacity and terminal duration data derived from its own proprietary model to make short-term predictions of port throughput. The base point for the indices is 100, collected on January 2019. The estimated number for January 2023 is 101.9, which is the lowest since 101.4 in July 2020.

When calculated by region, North America witnessed the largest drop in January of 11 percent year over year, followed by 8.2 percent year-over-year reduction in Europe.

Despite a small monthly uplift of 0.6 percent in Drewry’s North American Port Throughput Index in January 2023, the region appears set to remain on a downward trajectory, if the numbers at top West Coast ports in Los Angeles and Long Beach are any indication. In February, the San Pedro Bay ports saw decreases in container volume of 43.1 percent and 31.7 percent, respectively.

While Lunar New Year clearly had an impact on the projected February numbers, its earlier start date versus last year impacted the wider Greater China Port Throughput Index as well.

Shenzhen absorbed the largest monthly fall, with handling down by 30 percent month over month, or approximately 900,000 fewer twenty-foot equivalent units (TEUs), followed by Guangzhou, which handled roughly 500,000 fewer containers in January 2023.

Throughput at Shanghai was down 13 percent month over month, and  7.4 percent year over year, while the ports of Ningbo and Tianjin bucked the trend with 43.9 percent and 64.2 percent sequential growth, respectively.

The only region that posted annual growth was the Middle East and South Asia, where traffic was up 3.6 percent year over year.

Freight rates keep dipping

As most global ports continue to see traffic dwindle, ocean freight rates continue their downward trajectory.

Drewry’s World Container Index (WCI), which was released Thursday alongside the ports data, has decreased by 2 percent this week to $1,756.83 per 40-foot container, and has dropped by 79 percent when compared with the same week last year.

The latest Drewry WCI composite index is now 83 percent below the peak of $10,377 reached in September 2021.

But when zooming out, containers are getting cheaper than their more recent historical levels. It is 35 percent lower than the 10-year average of $2,690 per container, indicating a return to more normal prices, but remains 24 percent higher than average 2019 pre-pandemic rates of $1,420.

The average composite index for the year-to-date is $1,957 per container, which is $733 lower than the $2,690 10-year average.

Most of the container rate decline occurred in the second half of 2022. From June 2 to Dec. 15, average 40-foot container prices decreased 72 percent from $7,626 to $2,127.

Across the eight major East-West trade routes, rates saw their biggest weekly declines from Rotterdam to New York, which fell by 5 percent, or $265, to settle at $5,061 per shipment. Freight rates on the Shanghai to Rotterdam route had the second-biggest weekly fall at 4 percent to $1,490 per container.

On an annual basis, the Shanghai to Rotterdam route saw the biggest annual rate decline at 87 percent, coming down from $10,154 a year ago.

Rates for Shanghai to New York dipped 2 percent to $2,598 per 40-foot container, while importers would be paying 1 percent less on their respective routes of Shanghai to Los Angeles and New York to Rotterdam, at $1,897 and $1,153 per container.

However, rates on the Rotterdam to Shanghai increased 1 percent to $693, the lowest priced containers across the major ocean shipping lanes. Rates on the Shanghai to Genoa and Los Angeles to Shanghai lanes hovered around the previous week’s level, Drewry said.

Drewry expects small sequential reductions in rates in the coming weeks.


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