Market updates: Container market – May 2022

Highlights of this month :

 

-. Lowering demand forecasts:

Drewry lowered its demand forecast to '22 (existing 4.6% -> 4.1%) and '23 (existing 3.5% -> 2.8%). One of the many factors is that macroeconomic sentiment will slow down due to the Russia-Ukraine war, the blockade effect of China's Zero Corona policy, and the U.S. sharp rate hike.

On most routes, the volume of goods transported in '23 is expected to decrease in '22 , the Asia-Europe route alone is expected to increase to (22 years: 1.8% -> 23 years: 3.3%). This is because the volume of goods is expected to recover slightly in 23 as the Russia-Ukraine war ends.

 

-. Trend check

1) Short-term freight rates for container ships (SCFI) continued to decline. Although it has rebounded in the last 18 weeks, freights are still very high. As for the recent decline, the slowdown in manufacturing production due to the Chinese blockade was the most affected. The positive part is that freights have stabilized somewhat due to long-term freight adjustments.

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2) It is in that it provides new opportunities to new market participants. In particular, the sharp rise in freights, such as the China-U.S. route, provided an opportunity for new shipping companies to enter. It is expected to provide predictable and stable freights based on stable shipping volume in the future.

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3) Let's take a look at the effects of China's blockade due to COVID-19. The closure of the plant in Shanghai, China, has dealt a significant blow to the manufacturer. What is more worrisome is not the end of this case, but it is expected to decrease in terms of demand if new factories are closed.

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4) Still increasing uncertainty. Both the Russia-Ukraine war and the Chinese blockade, which have been mentioned, are delaying the recovery of the container supply chain. In the event of an unexpected event in such an uncertain situation, freights(SCFI) are likely to flow in the direction of a sharp rise/fall.

 

Thanks.