The Asia Pacific market has continued with its rise and fall in Q2. Carriers implemented a General Rate Increase (GRI) in June but it was short lived, as the rate came back down shortly thereafter. The current spot rate is close to the level it was in the second half of May, before the GRI was implemented. We anticipate Q3 to continue on the same trajectory, with imports to North America continuing to decline due to the economic downturn and high interest rates affecting importers buying power. Industry publications are also predicting another GRI and/or Peak Season Surcharge (PSS) to be implemented at the beginning of August, which will likely suffer the same quick decline as the Q2 increases.
With the current market conditions, the load factor for vessels is between 50-70%. Carriers are trying to cut their losses by implementing blank sailings, reducing capacity on lanes which are not profitable and allocating vessels to more profitable trade lanes (i.e. Asia – Europe, India Subcontinent, Latin America and Intra-Asia). By implementing blank sailings, carriers reduce space for bookings and create their own supply and demand. This helps to increase vessel bookings per sailing and could cause carriers to be overbooked which can result in cargo rollovers and delays.
The Europe to North America market rates continue to decline and are now close to pre-pandemic levels. There is still a downturn in volumes and no signals from the market that these will be rebounding soon. The supply situation is not changing, so rates remain under pressure and the shipping lines are forced to work on rates to avoid losing market share. Space and equipment are fluid on these trade lanes. We expect to see the same trend continue for Q3.
Air freight continues to be affected by the economic downturn, however, economists are confident it won’t get much worse. It is expected that capacity will not go back to pre-pandemic levels for quite some time, however, capacity should improve due to the resurgence of global tourism. China and Hong Kong are expected to take a little longer to recover, as they seem to be behind in the rebound in passenger traffic. The airline industry was hoping for a Q3 rebound, but we do not feel that this will happen. Some carriers are operating at 20% of pre-COVID levels, but hope to be close to 85% by the end of 2023.
Our mystery city’s historic cable car has been climbing the hill to Kelburn Lookout since 1912.
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