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Signs of an economic recession?

The logistical nightmare in Shanghai is compounded by a disturbing drop in demand for land freight transport in the US

On April 20, there were 230 container ships in front of the port of Shanghai and in the maritime area it shares with the nearby port of Ningbo, all waiting for a berthing site as a result of the delays suffered by the logistics chain in the city due to the strict confinement ordered by the Chinese authorities. This represents a 35% increase over the same period of last year, according to Bloomberg data.

On the other hand, containers in the port have to wait an average of 12.1 days before a truck picks them up and delivers them to inland destinations, according to Project44. The average of April 18 was almost three times longer than the 4.6 days average they had to wait on March 28.

The logistical nightmare in China is compounded by the first signs of the effects of inflationary pressure and the consequent destruction of demand in the US. In fact, demand for truck freight is near recession levels, according to the Bank of America. As a result, shippers expect rates, capacity, and inventory levels to coincide with figures that have not been observed since May and June 2020, when the first COVID-19 closures caused a historical decrease in cargo volumes due to the initial drop in domestic consumption.

In a note sent on April 22 to investors, Ken Hoexter, the managing director of Truck Research at Bank of America, wrote that shippers' perception of demand for goods has dropped by 23% year on year.

A new onslaught of containers?
The possible interaction between the growing decrease in demand and the cessation of the blockades in Asia remains to be seen. It's the last factor that, so far, has people expecting an onslaught of containers once the United States' seasonal rebound of imports begins.

"We expect waiting times will increase significantly once export activities are resumed and a large volume of ships are directed to the ports of the west coast of the US," said Julie Gerdeman, the executive director of Everstream Analytics risk analysis consultancy.

The total container count for the U.S. dual center of Los Angeles and Long Beach reached at least 57 vessels last Wednesday, the highest since late February. Some other indicators, such as container dwell times, are also increasing again. The forecasts for Europe are also discouraging. "We expect a greater disaster than last year," said Jacques Vandermeiren, the executive director of the Port of Antwerp.

 

Source: mundomaritimo.cl 


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