With ocean freight prices falling further, the "peak season" is over

MSI found that European demand for Asian imports was up around 5.9 per cent year on year in July and 2.8 per cent year-to-date. However, inventory concerns still appear to be affecting the US, with freight rates on Asia-US routes falling 8.3 per cent in July from a year earlier and 13.1 per cent in August. Overall, MSI has declared that "the peak season is over."

"Market participants said seasonal demand had been tapering off over the past four weeks ahead of China's Golden Week holiday and was expected to reach trough levels in the week of early October," MSI reported.

Meanwhile, on transatlantic westbound routes, weak demand has done little to help shipping companies absorb significant new capacity, with rates already breaking through pre-pandemic lows and about 40 percent lower than in 2019, according to Freightos. Describing demand as "particularly tough", with a 16.5 per cent year-on-year decline in July, MSI said it "expects to continue to see significant monthly year-on-year declines through the end of 2023".

That's despite reports of an overall increase in consumer spending in the United States. "A recent analysis suggests that some of the spending growth is on non-shipping goods like video games, which is another factor in the relative disconnect between spending and shipping rates," noted Judah Levine, head of research at Freightos. .

Mr Judah Levine also said that empty flights and suspended services "will only become more challenging as reduced volumes and record new capacity (approximately one vessel per day added for the rest of the year) continue to enter the global market".

According to Alphaliner, about 30 per cent of the new capacity delivered this year has been committed to Asia-North America routes, 22 per cent to Asia-Europe routes and about 24 per cent has yet to be allocated. Alphaliner expects some of the new ships to be allocated for north-south trade routes between Asia and Latin America. To date, less than 14% of ships have been placed on the route.

Meanwhile, scrap ship cash buyer GMS has reported "feverish" buying enthusiasm in the Indian subcontinent's ship recycling market. The price of ship recycling in India went up to $580 per light drainage ton and even $600 in one case."