Emma ConnorsSouth-East Asia correspondentUpdatedJan 16, 2023 – 4.14pm,first published at3.57pmFreight costs for consumer goods are tipped to remain muted and possibly fall this year, with tepid demand keeping a lid on the number of containers shipped around the globe.
Fewer containers passed through the world’s biggest trans-shipment ports of Singapore and Shanghai last year than in 2021, whenpandemic-buying frenziessnarled supply chains and sent shipping costs soaring.
Cargo cult: The annual increase in containers shipped around the world will not return to pre-pandemic norms for the foreseeable future.Natalie Boog
Global maritime trade will pick up this year, but growth will stall below historic norms, according to the United Nations Conference on Trade and Development (UNCTAD). Container xChange, a German container logistics platform, has warned an all-out price war is possible on container shipping prices.
The Shanghai Containerised Freight Index, which measures freight rates and volumes of 12 key routes out of China, has been in freefall for 12 months. The Port of Singapore said it had taken a bigger share of a shrinking pie in 2022, “remaining resilient compared to the decline in global container trade of about 3 per cent to 4 per cent”.
Declining volumes helped cool prices, and it appears those trends will persist through 2023. The Freight Trade Alliance cites spot prices for freight out of China to Australia as a key indicator.
“Freight rates globally have come down considerably since the peak of the pandemic when high demand and congestion at major international ports caused major disruption,” said FTA director Paul Zalai.
“Freight rates continue to soften as shipping lines look for volume post-Christmas and in the lead-up to the Chinese New Year period that will see extended closure periods of much of China’s commerce.”
Container volumes to grow
About 80 per cent of global goods trade travels by sea and about 35 per cent of that is packed in containers.
UNCTAD expects global maritime trade will grow by about 2.1 per cent a year for the next four years, down from an average of 3.3 per cent over the past 30 years.
UNCTAD has called for stronger transport infrastructure, improved connectivity, expanded warehouses and fewer shortages of labour and equipment to improve operations and minimise the impact of shocks, such as the COVID-19 pandemic.
The UNCTAD 2022 review of Maritime Transport noted that freight and charter rates were still above pre-COVID-19 levels and rates remained high for oil and natural gas tanker cargo because of the energy crisis.
While Australia’s importers will benefit from lower freight rates, most will also bear the cost of larger than necessary inventories asgoods continue to get held up at sea or in port, the FTA says.
The Productivity Commission estimates inefficiencies at Australia’s major container ports cost the Australian economy about $600 million a year. It has called for an increase in competition and recommended the strengthening of voluntary protocols to address terminal operators’ abuse of market power.
The World Bank rated Singapore as the world’s 31st most efficient port in 2021, its most recent league. Melbourne was rated 294th using the World Bank’s statistical measure. Sydney’s Port Botany came in at No. 321.
Last week the Albanese government released the Productivity Commission’s final report into Australia’s maritime logistics system.
The PC found the World Bank’s benchmarking did not account for the fact that some ports had access to high levels of capital to turn ships around faster - a key port metric.
Emma Connorsis the South-east Asia correspondent. She was editor of the Perspective and Review sections.Connect withEmmaonTwitter.EmailEmmaatemma. connors @ afr. com
Source: AFR
P.S looking good, this stock got hit a lot with import price. Not sure about their contract manufacturing division though, but if price is locked in, and everything goes cheaper (not sure about energy cost though) they could make profit on balance sheet, it could help a lot in getting more dividend and higher sp.
(20min delay)