Global demand drops but record exports from Far East to US and Europe

Global demand in the month of June fell by 1.7% from the all-time-high recorded for May 2024. Despite this drop, it is still up 7.1% in H1-2024 compared to H1-2023 (Source: Container Trades Statistics). While global demand has slipped slightly, containerized goods arriving from the Far East into Europe and North America kept growing in June, up 2.6% and 5.8% respectively month-on-month.

Imports from the Far East into some other keys regions fell in June from May. Into the Indian Sub-continent & Middle East volumes fell by 8%, into South and Central America by 3% and into Sub-Saharan Africa by 4%.

Intra-Asian demand was also down 3% in June, in what is also the largest drop in number of containers, illustrating a slowing in growth on this trade during Q2.

Meanwhile, container shipping demand, as measured by Container Trades Statistics, reached an all-time-high in June for Southeast Asia to North America - up by 8.7% from May 2024 and exceeding 500 000 TEU for the first time. For the first half of 2024, demand grew by 23.0% year-on-year. Xeneta's spot index for Far Eastern exports peaked in early July, arresting two months of consistently rising freight rates. It may just be that carriers have adjusted services to ease congestion around key transshipment ports, while shippers have kept their cool after frontloading in Mar-Jun.

For the full year, demand should be expected within the range of 2.7%-3.7% when measured in TEU volume terms. Much more when measured in TEU-mile terms obviously with the much longer sailing distances for most cargo avoiding the Red Sea.

Container shipping supply chains in Bangladesh have been impacted by the civil unrest which has seen Prime Minister Sheik Hasani resign on 5 August.

K+N’s seaexplorer reports ‘Heavily Disrupted Operations’ and ‘The port of Chittagong (Chattogram) is heavily congested’.

The current vessel waiting time at Chittagong remains at 3- 4 days, but the number of waiting vessels at anchorage increased to 11 (total capacity 16,000 TEU). Currently, approximately 41 000 TEUs are lying inside the port. Port authorities have stated they are aware of the situation and are ‘trying to keep operations as vibrant as possible’.

The civil disorder is causing problems across Bangladesh manufacturing and supply chains. Some factories have been closed since the escalation with exports forced almost to a stop. Customs processes remain all but suspended with shipments through seaports and airports disrupted, while rail and truck transport are also widely affected.

Elsewhere congestion in Singapore seems manageable. Although still elevated compared to January and February, Singapore is now back to the level seen in early April. Meanwhile, some recent reports of congestion in Tanjung Pelepas are incorrect.

In Barcelona, another port which has seen severe congestion in recent months, the line of ships waiting has come down. However, the ships waiting are bigger than those leaving, keeping congestion around the same level it has been since March. In H1-24, 49% more containers were transshipped in Barcelona than the same time last year. In June alone, transshipments were up 62% year-on-year. This is due to the impact of diversions in the Red Sea, while containers on deep ocean routes from the Far East are being offloaded in the West Mediterranean for transshipment to the East Mediterranean.

Other Spanish ports that have been extensively used for transshipments this year as carriers adjusted services are the ports of Las Palmas and Valencia. Here transshipment volumes are up by 23% and 18% in H1-24 year-on-year.

Remember to keep up-to-date on the latest congestion data and insight in Xeneta’s monthly Container Trends Report – ask your Customer Success Manager for more information or access it yourself in the IQ Hub, where you will also find iXRT-reports and many other insightful analytical pieces about the container shipping market.

Macro economic performance in H1

US goods demand grew by 2% year-on-year in Q2 - an acceleration from Q1 but by no means spectacular. Despite the lukewarm employment report of early August that showed just 114,000 jobs were added in July, it remains a healthy but cooling labor market with wage gains expected to continue to support US consumers.

Declining consumer confidence and savings are the grey clouds overhead (even though consumer confidence is merely a right-here-right-now measurement of mood rather than a long-term indication of demand). The US inventory-to-sales ratio remained around 2019-levels in Q2 and unchanged from the Q1 average.

In contrast, Euro area consumption continues to grow at a slower pace than the US, despite fundamentals indicating a robust labor market and wage gains. The total Euro area retail sales fell in June by 0.3% from May, which was on par with April.

Manufacturing PMI from China, measuring the medium and smaller sized enterprises, fell below the threshold in July to reach 49.8, down from 51.8 in June, suggesting the export boom has peaked.