Facing a complex international scenario of inflationary pressure and high interest rates, there is a lot of speculation about the effects of this year’s peak season, with global stocks signaling caution and reflecting a slower pace of replenishment. Experts expect that the cycle of shipments and restocking for 2023 will be very similar to 2022, when the peak season did not increase the respective volumes.

“It is expected that the rising interest rates around the world, except in Japan, will make inventory replenishment and shipping less necessary. However, unlike 2022, when rates were reduced during the high season there is an expectation that rates will have a small increase this year. This recovery is attributable to global increases in specific product categories, reflecting a growing relationship in product categories in different geographical regions,” says Mario Veraldo, CEO of logistics company MTM Logix.

According to Veraldo, US imports from Asia, for example, increased for the fifth consecutive month in July to 1.46 million TEUs, the highest figure since September 2022. This raises the likelihood of annual growth in imports this fall, despite a decline of 10.1% compared to July 2022. The National Retail Federation (NRF) forecasts a slight decrease in October imports but expects growth in November and December. Spot rates have more than doubled since the end of June, but 2023 freight rate levels remain lower than in 2022 and 2021. The West Coast’s share of imports from Asia fell to 53.1% in July, with the East and Gulf coasts benefiting from the shift.

“These trends provide insights into current market dynamics, highlighting the importance of adaptability and strategic planning in a complex global market environment. The main challenge lies in the replenishment process in many sectors, which generally involves little data and relies heavily on intuitive ‘gut feelings’. This approach contributed to the whip effects experienced during the pandemic,” says the CEO.

Latin America

Latin America is following the global landscape of inflationary pressures and high interest rates, but for Veraldo, the main difference is that the nearshoring movement allows the region the opportunity to start a virtuous cycle driven by a collaborative approach with the US, which is beginning to replace some of its product chains originating in China for the Latin American continent, mainly Mexico and Brazil. These countries should see small increases in their imports, driven by instinctive decisions and the generation of backorders during the 2023 high season and in terms of exports, the tendency is for significant growth.

Post-pandemic recovery

The order book for container ships is at its highest ever, reflecting the restructuring of supply and demand in the sector. This aligns with the observed trends in global inventory figures, interest rates, and specific product category increases, all of which are influencing the current freight rate dynamics. These trends suggest a scenario in which, unless the world economy grows and the movement of goods increases, freight rates could fall below pre-pandemic levels. This could lead to a scenario of prolonged deflation.

“Ocean shipping will continue to drive global trade due to the need for a lower CO2 footprint. The industry’s commitment to sustainability and the global push for reducing emissions ensure that ocean shipping remains a vital component of international trade,” concludes Veraldo.

Source: MTM Logix