Worsening economic conditions forced cargo shipowners to cancel sailings in October, according to The Wall Street Journal (subscription).
Calm waters: Popular cargo sailing routes will have less traffic as inflation puts pressure on global trade and consumer spending. Although the peak season typically starts in October, shipping rates are plummeting as large retailers cut inventories to counteract weaker demand.
Dealing with delays: “Trans-Pacific shipping rates have plummeted roughly 75% from year-ago levels,” according to the Journal.
- A variety of factors are impacting trade activity, from Russia’s invasion of Ukraine to labor shortages around the world—though the precise reasons for cancellations are not always clear.
- “Some carriers are reluctant to share details on canceled sailings to avoid showing competitors what is happening in their network. Voyages can be scrapped because of port congestion, scheduling issues or falling demand.”
Capacity rises: Recent investments in freight capacity will likely put pressure on freight rates, making it cheaper to ship goods overseas.
- “Ocean container capacity is slated to increase 4% this year and is expected to rise by 8.8% in 2023 and a further 9.7% in 2024, according to London-based shipping adviser Braemar PLC.”
- “Since early 2020, some 1,056 ships that can move about 8 million boxes were ordered, compared with 688 vessels ordered from 2015 to 2019 that can move around 5 million boxes.”