Logistics managers are sending the message to clients that the ocean freight market is correcting itself at a faster pace than anticipated. Shipping firm HLS recently wrote to clients, “We initially expected the market was about to correct itself and normalize some time in 2023, but it comes much earlier than we expected.” The peak in the market, according to Alan Baer, CEO of OL USA, was the second quarter. “From there a steady decline,” Baer said. The market may have reached the low point in November, he said, but added, “it is still too early to tell if this is a trend.”
Despite the spot market collapse, the major shipping lines reported nearly $122 billion in profits over the first three quarters, according to Sea-Intelligence CEO Alan Murphy. Trade data shows a decline in Asia imports to the U.S. by 11% year-over-year in October, which built on a September decline. “We don’t find any grounds for optimism in November,” HLS told clients.
The ocean freight contract market tracked by Xeneta’s global XSI recorded a drop of 5.7% in November, the third month in a row rates have dropped, and the largest month-over-month decline recorded since the launch of the XSI in 2019, according to Peter Sand, chief analyst at Xeneta. “For many carriers, the fall in the XSI will trigger the fall in their average rates and will bring an end to record-breaking quarters,” he said.