DHL: Incoming capacity poses fresh challenges for ocean freight

SINGAPORE – Media OutReach – 15 November 2022 – The DHL Ocean Freight Market Update Report November 2022 is now available. Below are highlights of the latest developments of the global ocean freight market in this monthly analysis by DHL Global Forwarding.

• Demandoutlook – Various events such as war in Ukraine, the energy crisis and inflation are loweringconsumerspend, andthusdemandingoods. “With the downward shift in market rates, it is crucial to provide our customers with the best solutions to optimize their costs in the months to come,” said Kelvin Leung, CEO, DHL Global Forwarding Asia Pacific.

• Capacity – With a huge number of new large containerships hitting the water in 2023 at a time of stagnatingdemand, the liner shipping market might be headed towards structural overcapacity which couldimpactprofits.

• China – While port-related congestion issues in Europe and the U.S. have lessened, supplychaindisruptionsarecontinuinginChina which show no signs of easing pandemic-driven restrictions, thus dampening both international trade and China’s own economic growth.

• “We are closely monitoring the situation in China, and hope to see some loosening of the restrictions by next year. This would allow manufacturers to plan production and deliveries more efficiently. It would also boost growth and confidence in the important Chinese domestic market,” added Leung.

• Economicoutlook – The latest PMI surveys signalled that the downturninglobaleconomicactivityisshowingnosignofrelenting. Bennett Parrish, Global Economist at J.P.Morgan, added, “With demand weak, geopolitical and market volatility high, and inflationary pressures still elevated, the growthoutlookremainsdownbeatfortheremainderoftheyear.”

• The eurozone economy looks set to contract in the fourth quarter given the steepening loss of output and deteriorating demand picture seen in October. The U.S. economy is also struggling with manufacturing activity growing at its slowest pace.

• Shiftingrates – The combination of a lowereddemand, along with growingcapacity, has led to a dropinrates. Across many trade lanes, cargo volumesareweakening, and spot freight rates are projected to move back to pre-pandemic levels.

The DHL Ocean Freight Market Update is a monthly report by DHL Global Forwarding which tracks and analyses the latest developments of the global ocean freight market. Read the full analysis on DHL’s Logistics of Things here.

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