A DOWNWARD shift in freight rate levels was prompted by a muted peak shipping season, as effective vessel supply increase and demand in some import markets slows, according to the most recent DHL Ocean Freight Market Update report.

DHL Global Forwarding Asia Pacific CEO Kelvin Leung said, “This year, we did not see the normal rush for space ahead of Golden Week when factories close in China”.

Easing bottlenecks – According to maritime analysis firm Sea-Intelligence, 50% of the global port congestion that was tying up vessels at ports in January had been cleared by August.

The release of this extra capacity has relieved physical shortages of capacity and added to downward pressure on spot freight rates which have been in decline on the major East-West trades since the second quarter, according to the DHL report.

“We’ve seen an easing of port congestion, although labour strikes at ports in the U.K. are causing some disruption and we’re still seeing vessel queues on the U.S. east coast which has offset improvements at US West Coast ports,” Mr Leung said.

The demand side outlook continues to weaken on war risk, skyrocketing energy costs, political instability and general inflation, all of which are now impacting overall consumer spending and thus trade volumes, according to the report.

The combination of a manufacturing sector in recession and rising inflationary pressures would add further to concerns about the outlook for the eurozone economy.

Meanwhile, the closure of factories during China’s October Golden Week holiday along with the Chinese government’s continuing zero Covid-19 policy have impacted production, reducing demand for shipping capacity.

Drewry has now lowered its global container handling demand outlook for 2022 and 2023 to 1.5%, and to 1.9%, respectively, on the back of heavily downgraded GDP predictions.

The more favourable supply-demand balance for shipping’s customers has led to a global schedule reliability improvement of 5.8 percentage points in August compared to July, while the average delay for late vessel arrivals also dropped sharply, according to Sea-Intelligence.

The DHL Ocean Freight Market Update is a monthly report by DHL Global Forwarding.