China has had its share of difficulties over the last month, with people protesting the country’s zero-COVID policies.
Many in the economic community feel that it’s too late to repair the damage that’s already been done. While China has begun lifting some of its restrictions, many companies are reassessing China’s place in their supply chains.
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Container volume from China to the United States dropped by 21% between the months of August and November. This coincides with a 40%drop in US manufacturing orders in China.
This has resulted in carriers suspending services while increasing the number of blank sailings. The three major alliances have cutback on vessel capacity by 40-50% until the Chinese new year.
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What’s behind the lack of demand? Part of it can be blamed on cargo getting moved away from the West Coast, and a peak season that never really peaked thanks to a variety of issues, including the state of the economy.
Falling demand is forcing carriers to reassess capacity. There’s already been a significant increase in the number of blank sailings and there may be even further reductions in the future.
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Europe’s feeder operators continue to feel the pain of declining volumes from Asia. Notably, the Port of Hamburg, the key hub in the Baltic region, says that their feeder volumes have “suffered a striking downturn.” Container hubs in both Rotterdam and Antwerp-Bruges are also struggling with disappointing volumes.
This is a completely different scenario from what happened over the last 18 months when owners were locking in charters for two-year periods at sky-high rates.
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Members of the air cargo industry hope that implementation of AI and automation will cut back on some of the challenges it faces in its day-to-day operations. As air cargo volumes have significantly increased, implementing efficient processes while providing access to accurate real-time data is more crucial than ever. Relying on manual processes comes at an incredible cost to the industry.
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