Global container shipping turned a corner in the second quarter of 2022, according to the latest Quarterly Review of the market produced by MDS Transmodal and Global Shippers Forum.
Covid lockdowns in China, suppressing the supply of manufactured goods and demand for raw materials, and plummeting sentiment in consuming countries due to rising interest rates and energy prices, contributed to a fall in average earnings per container carried for the first time since 2020 (Graph 4.1).
While total container carryings were up in Q1, this volume remained below the level recorded in the same period a year ago (Graph 1.2). This was despite traffic switching to other modes or bulk shipping earlier in the year, returning to the more traditional containerized mode.
The reliability and consistency of port calls showed a slight improvement in Q2, but this was seemingly made by intermediate port calls being missed altogether. The capacity lost to ‘skipped’ ports remains high (Graph 7.2).
A reshaping of container shipping service patterns seems to be underway, with a further increase in Q2 in the number of services connecting no more than two regions and a reduction in those linking more than two regions (Graph 2.2). In practical terms, this means ‘shuttle’ services are replacing long, multi-port ‘loop’ schedules with transhipments required at hub ports for containers to reach their ultimate destinations.
Mike Garratt, Chairman of MDS Transmodal, commented, “In the last quarter, we have seen global network capacity grow marginally, but underlying demand stays flat. Spot freight rates are now falling steadily, and it will be interesting to see the share of the minor bulk trade that returns to the major lines. The direct connectivity and reliability of making port calls offered to shippers continue to deteriorate.
In welcoming the Quarterly report James Hookham, Director of GSF, said, “This is the first time the GSF/MDS Transmodal Quarterly Review is showing a significant change in the direction of travel. This is just one set of data points, but shippers are telling us the world economy, international trade, and the global shipping market have entered a new phase, with different factors at work compared to the past two years.”
Over the coming months, GSF and MDS Transmodal will continue monitoring whether the opportunistic gains made by shipping lines since 2020 are consolidated into a strategic shift in rates and service patterns imposed on shippers or whether different carriers will respond instinctively and distinctively to the changing conditions.
“This change in market dynamics could provide a context for the use of freedoms granted to shipping lines under anti-trust immunity and Block Exemption legislation to re-engineer an industry-wide shift in capacity deployment, service patterns, port call frequency, and market share concentration. Recent experience has shown this is not a market where regulators can ‘legislate and forget’, hoping expected behaviors are observed.
The number of parameters needed to monitor the market is many and complex. GSF and MDS Transmodal invite competition regulators worldwide to ‘watch this space with us over the coming months”.
