With more than 150 stations in over 17 countries, Dimerco connects Asia with the world like no other global 3PL. Every month, we gather firsthand market information from the industry players of our global network. Here's what you should know for February to March of 2023:
Air Freight
- BSA for 2023 - As the BSA expires at the end of March for Transpacific East Bound and Far East West Bound traffic, the new rates under negotiation will generally be lower by around 15% to 20% compared to the previous year, but still higher than the current market rate.
- Shippers Expecting 2019 Rates - Shippers going to open bid in the first quarter for Q1 of 2023 are expecting to have the logistics expense return to 2019 levels with a more stable cost structure.
- Higher Demand for Intra Asia - Intra Asia traffic is still showing higher demand compared with Transpacific Eastbound and Far East Westbound traffic due to the China Plus One strategy and the RECP trade pact. India, Vietnam and Thailand are currently the most popular destinations for companies diversifying production beyond China.
Ocean Freight
- Service Sector Gradually Recovers in China - According to S&P Global, the recent easing of the COVID-19 restrictions in China led to the resurgence of service activities. Business confidence for the service sector is at the highest since 2011, with Caixin services PMI reaching 52.9. Although it is still premature to be too optimistic, it is worth observing the movement of the indicators, especially the alignment of the manufacturing and service sector.
- Lower 2023 Ocean Rates Compared with 2020 to 2022 - As the ocean rates continue to drop, the Shanghai Containerized Freight Index (SCFI) composite index in week 7 for all trades ex Asia posted a 1% decrease compared to 2020, and a staggering 80% when compared to 2022. Despite the poor vessel filling factors, exporters and importers may still experience space constraints for some trade lanes due to blank sailings to reduce redundant capacity.
- Maersk and MSC to divorce 2M Alliance - Two of the world’s largest carriers, Mediterranean Shipping Company (MSC) and Maersk, have jointly announced that their vessel sharing agreement (VSA) will end on Jan 1, 2025.
- Capacity Withdrawals Continues to Counter Weak Demand - In order to counter the weak cargo demand, the overall weekly capacity for all trades after the Chinese New Year period saw a withdrawal by 37% ex Asia. To be more specific, the weekly capacity ex Asia for Transpacific, Europe and Mediterranean were withdrawn by 50% , 35% and 30% respectively.
