The supply chain industry is hoping for a better peak season this year and has high expectations that freight demand will recover towards the middle of the year.This is according to the latest container market forecaster for April produced by the online logistics platform Container xChange.But, while industry sentiment is gradually turning positive, there have been many headwinds in the shipping sector in the first quarter of the year.“The global container logistic ecosystem is like a spider’s web,” said Christian Roeloffs, co-founder and CEO of Container xChange. “One disruption does not linearly impact the knot. Instead, every disruption reverberates across the web – sometimes in unexpected directions. The increase in Fed rates, the banking sector crisis, and the strikes may seem concentrated in one region, but they have their impact across all trade lanes.”He said North America had registered the biggest decline in average prices for 20-foot dry cargo containers during the first three months of the year. The US was followed by the Middle East and then Southeast Asia.Contract negotiations, currently under way and due in May, have been problematic, with shippers trying to delay these as the rates are still higher than the spot rates. Roeloffs said shippers seemed to be holding back to place themselves in better positions during the negotiations. Another expectation is the reduction of contract tenures from one year to smaller time frames. “Despite avoiding a global financial and economic recession for now, the shipping industry is experiencing a freight recession due to the postponement of inventory replenishment cycles by retailers who overstocked. As we look ahead, we anticipate a subdued rebound in demand as retailers begin to deplete their excess stock in the coming months, leading up to the peak season.” He said a survey conducted in early April with close to 300 supply chain professionals had shown that at least 48% of respondents were expecting an improved peak season. This is an important time for NVOCCs and freight forwarders who are diligently crafting their strategies to adapt to the current market conditions impacting consumer and freight demand. Roeloffs added that the anticipated changes in the industry, particularly after contract renewals towards the end of the first half of 2023, signalled a crucial time for preparation. He said it was clear that the industry was cautiously optimistic at this stage as attempts were being made to leverage experience and industry insights to navigate the challenges and capitalise on opportunities.The industry, in his view, is hopeful that the pent-up freight demand will be propelled by the beginning of the retail inventory replenishment cycles in the quarter after a slump in demand and overstocking by retailers. The world is currently looking at a more diverse sourcing and manufacturing trade strategy.He said within Asia, the diversification of trade would prove to be beneficial for ocean trade because it would cause a boom in regional trade. “It will also lead to more locations, adding to the direct trade from the region to North America or Europe.”
