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Major Chinese export markets are showing signs of a recovery after the steep post-Golden Week holiday decline, led by a rebound in demand for intra-Asia services, according to the latest Asia-Pacific market update from Maersk.

Nevertheless, the “new normal” could see Maersk and its liner peers forced to make radical changes to their networks, as they adapt services to meet a short-to-longer-term reduction in demand.

Maersk said the global economic outlook appeared to be deteriorating against a background of slowing growth and elevated inflation levels.

“As a result, global container volumes are continuing to fall, with negative growth in virtually all the main markets, causing Maersk to reduce capacity on major ocean trades from Asia to match demand,” says the report.

However, Maersk’s regional head of ocean management for the Asia-Pacific region, Morten Juul, remains positive. He said: “The demand for ocean transport is stabilising and we are adjusting our network to match the new reality.”

But the slump in demand resulted in a collapse in container spot rates, which Maersk’s report concedes has been “dramatic”.

Anti-lockdown protests have broken out across multiple cities in China, and the fresh Covid-restrictions threaten supply chains again.

A fire which killed 10 people in Urumqi, capital of the western Xinjiang region, appears to have triggered the widespread unrest, and strong-arm reprisals from the authorities.

The city had been under lockdown for more than 100 days and protesters took to the streets, blaming Covid-restrictions for delaying the response to the tragedy by emergency services and calling for an end to the lockdown.

Similar protests broke out over the weekend in cities including Shanghai, Beijing, Guangzhou, Wuhan and Chengdu, with videos on social media showing largely peaceful protests and vigils outside universities.

In an unprecedented show of civil disobedience, the protesters in Shanghai chanted: “Down with the Chinese Communist Party, down with Xi Jinping,” Reuters reported.

Other protesters held up blank sheets of white paper to “represent everything they cannot say”, the reports said, some calling it “the biggest act of defiance since Tiananmen Square”.

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Continuous slide of the freight rates is expected to bring them to the pre-COVID level. Shanghai-North Europe freight rates dropped to $2,350/TEU. Shanghai-US East Coast rate is at $3,900/FEU. There are also declines in rates from Shanghai to the Persian Gulf, South America, and Australia.

China, one of the most important countries for shipping demand, has significantly slowed down its industrial growth because of its zero-COVID policy which will have consequences for businesses worldwide. China’s dry bulk commodity import demand has declined by 4.7% year-on-year to 1.6bn tonnes. Moreover, the country’s container volumes have reportedly fallen by -22% year over year. 

Trying to halter the drop in rates on trade lanes, companies are scheduling more blank sailings to reduce capacity (for example on the eastbound trans-Pacific trade lane.)  However, these steps may not be enough. Liners will idle. In fact, experts predict that idling will reach approximately 1.5m TEU in 2023, or roughly 6% of the end-2022 cellular fleet.

When it comes to carriers, contracts no longer seem to be important anymore, some experts admit. The problem is that they were set high when the carriers tried to lock in shippers on extended deals, but now when the market pivots so unexpectedly, shipping on contracts becomes unsustainable. 

Truckers’ strike in South Korea has caused disruptions, in particular, interrupting deliveries of raw and semi-finished materials. 

In Austria, a strike is looming over the horizon. All trains will be stopped on Monday unless another decision is made during the negotiations. 

Routes and services 

• Maersk has added a weekly rail service, the ‘Pratigya Express’, from Sonipat Inland Container Depot to APM Terminals Pipavav Port. 
• Ukrainian Railways will add 6 additional border crossings for rail freight to Europe: 3 facilities will be added on the border with Poland (Rawa-Ruska, Grebenne, and Starzhava – Krostsenko), 2 - on the border with Romania (the Delovo-Valea Visheului section), and 1 on the border with Moldova (at Berezino – Basarabeasca). 
• Ningbo-Zhoushan Port has opened a new sea-rail transport service to export new energy vehicles. 
• The terminals Malaszewicze and Biała Podlaska near the border with Belarus will have more capacity thanks to 13 new additional tracks. It will help to handle longer and heavier trains. 

Other 

• South Carolina Ports have completed the rail expansion at Inland Port Greer by adding 8,000 feet of new rail to meet cargo demands through 2040. The next phase will be about the expansion of the container yard. The completion of the project is scheduled for 2024. 
• After two years, the boxship backlog at Port of Long Beach, Port of Los Angeles has come to an end. No vessels are queuing anymore. 
• MSC withdrew from the plan to acquire ITA Airways.
• Rail Cargo Group will expand with a new branch and a new carrier in Serbia and China in 2023. By doing it in Serbia, the company will be able to offer connections towards Turkey and Greece via two alternative routes. 

These are only several changes that occurred in more than 250 bn freight rates across 25 million routes with more than 1 million market players. Want to share some news about your company, services, and routes? Just post them on MAXMODAL, a multimodal network that digitally connects routes and rates worldwide to automate sales and operations across container transportation & logistics industry. Join to innovate.

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Access to South Korea’s two busiest container ports, Busan and Gwangyang, has been blocked, causing box traffic to fall to 40% of normal levels.

The blockades are due to 25,000 truckers, members of the Cargo Truckers Solidarity Union, going on strike again today, demanding a minimum wage system to manage the relentless increase in fuel prices.

The Ministry of Land, Infrastructure and Transport (MoLIT) said container movement at major ports today totalled just 14,695 teu, compared with the usual 36,655 teu.

In Pohang, a major industrial area, incoming and outgoing shipments were delayed, including an 8,000-tonne shipment from Hyundai Steel.

The government said it was preparing military trucks for emergency transport if major manufacturers were unable to receive supplies.

Tanker trailer drivers are also involved in the latest industrial action and the Korea Oil Station Association has asked fuel station operators to prepare sufficient inventory so vehicles can still be fuelled.

The latest industrial action comes nearly six months after truckers ended an eight-day sit-in that was resolved after MoLIT extended the Safe Trucking Freight Rates System by three years. It was introduced in 2020, during the first wave of Covid, to ensure minimum wages and prevent overwork and dangerous driving.

And as well as a minimum wage, the truckers want the Safe Trucking Freight Rates System to be permanent.

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