The supply chain industry is hopeful of a better peak season this year and expects freight demand recovery in the Q2 of 2023, according to the recently published monthly container market forecaster for April by the online logistics platform, Container xChange.
The container price sentiment index (xCPSI), a sentiment analysis tool by Container xChange that concurrently surveys supply chain professionals on their short-term price expectations, continued to show negative readings until mid-March. But the results consistently turned positive, reaching an all-time high at the beginning of April, when the index started showing confidence building for the coming quarter.
While the industry sentiment is gradually turning positive, there have been many headwinds in the shipping sector in Q1. Overall, in the first quarter of 2023, North America registered the biggest decline in average prices for 20 ft dry cargo containers. After North America, the Middle East and ISC region witnessed the second biggest drop in container prices, followed by Southeast Asia.
Industry sources reveal that though the negotiations are due in May, shippers might delay these since the contract rates are still higher than the spot rates. So, the shippers are holding back to place themselves better during those 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.
A survey was conducted recently (April 2023) with close to 664 supply chain professionals by Container xChange and asked how they perceived the peak season to develop this year in 2023 as compared to the last year.
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 demand and freight demand. The anticipated changes in the industry, particularly after contract renewals towards the end of the first half of 2023, signal a crucial time for preparation. With cautious optimism, we foresee that this year’s peak season will be better than the previous year, as we leverage our experience and industry insights to navigate the challenges and capitalize on the opportunities that lie ahead.” commented Harry Duong, Pudong Prime, an international freight forwarding company, while sharing about the company’s forecasts for the rest of the year.
The industry 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.
Source: Container xChange
Read ISG Cover Story May 2023: https://theshippinggazette.com/key-issues-for-the-shipping-industry-for-the-rest-of-the-year/
