Import Recovery and Countering Overcapacity.
Your weekly All-Ways round-up of supply chain news.
Road to Recovery
US imports reached the lowest point since May 2020 last month but import volume is now slowly rising. However, year-over-year import volume will remain well below 2022 levels.
“There are many uncertainties about the economy, but we expect imports to show modest gains over the next several months,” said Jonathan Gold, NRF’s vice president for supply chain and customs policy.
Numbers will keep going up into midsummer. By July, import volume should be around the same levels as in 2022.
Retailers are still unsure about the number of seasonal items to order. So in order to avoid over-ordering products from Asian factories like what happened over the last two years, retailers are waiting to see what consumer buying trends will be.
“While import volumes remain low, the tight labor market and strong wages are helping consumers absorb the impact of inflation and continue to spend,” Ben Hackett, founder of Hackett Associates, said.
Hopefully, the market will continue to recover.
Staying Afloat
Container lines are looking for ways to counter excess capacity and slow demand growth by reducing slot supply.
In order to mitigate revenue losses after the collapse of the spot rate market because of slow economic growth, inflation, and high inventories, shipping lines are looking to deploy methods like -
➡️ Laying up ships
➡️ Mass blank sailings
➡️ Slow steaming to tie up more vessels and cut fuel costs
➡️ Retiring 25-year-old or older vessels
➡️ Rerouting vessels to avoid the costly Suez Canal
But, according to Alphaliner, the container ship order book now totals over 7.0m TEU with the vast majority of the new vessels to be delivered over the next 2 years. The top 11 container lines are set to receive another 89 large mainlines vessels that will be delivered throughout 2023.
“This year will thus see the arrival of the box ship delivery ‘wave’ that follows the ordering frenzy of 2020 and 2021,” Bronson Hsieh, former chairman of both Evergreen and Yang Ming container lines stated. “At least for the time being it looks as if all this extra tonnage will hit the liner trades at a time of faltering demand.”
Ocean carriers will have to find cargo to at least cover the variable cost to make it through the next period of time.