Jason Ryan, Staff
A significant consumer pullback is showing up in ocean shipping, with logistics managers and specialists stating they have seen a 20% drop in ocean freight orders for the months of September and October. The decline in demand cuts across products, including machinery, housing, industrial and some apparel.
Ocean carriers have been canceling dozens of sailings on the busiest routes during their peak season, the most recent sign of the economic whiplash touching firms as inflation weighs on global trade and consumer spending.
For the first two weeks of October, a total of about forty scheduled sailings to the U.S. West Coast from Asia and 21 sailings to the East Coast from Asia have already been scrapped. Typically, during this time of the year, an average of two to four sailings in a week are blanked, the industrial term for canceled sailings.
The cancellations in October 2022 are a sharp reversal from months back when the scarce shipping space pushed the freight rates higher, and the carriers’ profits touched record levels. In October 2021, firms like Walmart and Home Depot were chartering their ships to get around the bottlenecks at major ports to satisfy a surge in demand for imports, this is just not the case now.
Moreover, Trans-Pacific shipping rates have plummeted about 75% from levels seen a year ago. The transportation industry has been grappling with weaker demands as giant retailers cancel orders with vendors and step up their efforts to cut inventories.
The impact of Hurricane Ian can also be a reason for the cancellations. For example, this CNBC Supply Chain Heat Map demonstrates how vessel congestion on the east coast continues and how the impact of Hurricane Ian will delay the clearing out of vessel congestion.
To elaborate, during the period of Sept. 12-18, the Port of Savannah, a major U.S. seaport, reached the highest number of weekly average days waiting at anchor and cancellations since April 2022. Because of Hurricane Ian, zero vessel calls have been recorded at the Port of Savannah since Sept. 29. There is no question this new disruption by Ian will increase the existing congestion even more.