Ocean freight takes the headlines

The Russian invasion of Ukraine has had far-reaching consequences, including increased energy prices. It is widely acknowledged by political scientists and researchers that Russia bears responsibility for initiating this war. The victory of Ukraine will improve the logistical situation by utilizing territories that were inaccessible due to potential danger and international laws . Additionally, postwar economic pressure on Russia can lead to the normalization of the situation with oil refining and gas products. However, the current situation on the logistics market remains challenging.

The position of maritime carriers is rather precarious, ships are severely underloaded, companies do not receive more money, customers are afraid for their cargo, etc. On the agenda is determining how the 2023 long-term contract season will fare compared to current spot rate levels. Today we can say that long-term rates (with a validity period of more than 3 months) will be at a significantly lower level than in 2022. True, no less important is whether they coincide with the current levels of spot rates or not. Current realities suggest that they will not, as operators are confident that current spot rates are not a true reflection of the medium to long term, and this essentially means that the waiting game continues. Since it is very important for carriers to increase their position in negotiations on long-term rates, they do everything to meet the needs of customers in this direction as much as possible. And despite the deplorable situation, this is a significant plus. After all, carriers do everything to ensure a balance between cost, service and quality.

Outlook for 2023

Seaside terminal congestion no longer supports freight rates to the extent that it did before. Inflation is the cause of the development of such a phenomenon as the “crisis of the cost of living” among consumers in various parts of the globe. The combination of these factors, with a sudden 20% year-on-year drop in demand, has caused spot rates in the major East-West freight markets from Asia to fall further.

Of course, when analyzing the current market situation, more attention is paid to transportation from Asia to Europe and the USA, however, this is not all. The transatlantic market is a prime example of this.

Recently, there has been a decrease in rates, but they still have not returned to the level that they had in the period before the Covid-19 pandemic. This is due to the fact that Asian trading has historically been focused on B2C. In contrast, Trans-Atlantic owns a significantly larger share of B2B.

IMO 2023 and the costs associated with it remain under-researched in terms of the impact on the rate level. Experts who analyze the market in this area say that rates should not be allowed to drop to such a level that carriers will incur losses and the last 2 years have become a difficult period for the global economy.

Now another direction has been updated, which will become a key one for carriers in the fight for customers and, in principle, in ensuring their ability to be represented on the maritime transport services market. Today, there is a huge impact on tracking the environmental performance of carriers. Legislation is quite fluid and increasingly focused on reducing CO2 emissions.

The current resolution of the new year is that 2023 will be the year that will bring the level of development of relations between forwarders, carriers and shippers to a new level. This is a good time to develop the logistics system, at least the stars say so.

The conclusion of stable contracts, the absence of speculation in the market, concern for the environment and improving the quality of services provided – this is exactly what will allow the development of this industry.

Regarding air travel, China has officially changed its Covid-19 policy and now allows entry into China based on a negative PCR test and for the first time in 3 years without any quarantine requirement. Such changes will certainly affect the number of trips to the country – the number of passenger flights will grow. There will indeed be a need to address the issue of staffing shortages at airports and cargo handling facilities due to rapidly rising infection rates.

But all problems are solvable, but if we take into account the fact that business will develop in this case, then we can say that these are not problems at all. After all, it is quite logical that the number of trips will entail the number of business trips and, accordingly, the growth of trade. In fact, this opens up opportunities for countries in Europe and the United States to trade again as before with China.

It is difficult to deny the fact that the macro ecosystem is in a state of shock. Nevertheless, not everything is so bad – the consumers of the Western world are not accustomed to living on the last money and savings are still there, they allow at least some relative stability to be ensured. Although, of course, that uncertainty about the future, fear of the future make consumers be very careful and spend money not at the first snap of their fingers, everyone still thinks through their decisions and takes a balanced attitude to waste. First of all, people try to cover their basic needs. They pay for food and utilities rather than thinking about how to buy Asian items like textiles, garden furniture, electronics, etc.

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