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Asia-USWC schedule reliability fell in February
Global schedule reliability had its biggest one-month increase in 12 years during February. However, overall freight activity fell during the month. Regarding the trans-Pacific trade lane, USWC services worsened while East Coast services improved.
Some of the biggest gains in reliability came on north-south trade lanes. Container services from South America to Northern Europe increased 12.3 percentage points. The South America to North America trade improved 10.8 percentage points.
February schedule reliability from Asia to the West Coast fell to 30.2% from 34.2% in January. The decline came as imports from Asia to the USWC fell 37.2% YoY to 580,200 TEU. Schedule reliability from Asia to the US East Coast increased 3.5 percentage points to 39.2% in February.
Vessels globally arrived within a day of their scheduled arrival 60.2% of the time in February, up from 52.5% in January. That is the best on-time global performance since 63.7% in August 2020.
Reliability increased 7.7 percentage points month-over-month. That is the biggest month-to-month jump in performance since 2011. Global performance reliability has been trending higher since December 2021 when it hit a 12-year low of 31.7%.
Shipper savings to skyrocket in 2023 at expense of carriers
The container shipping market is facing a sharp correction. As a result, shippers will receive massive savings while carriers experience plunging profits. The aggressive market correction is estimated to reduce industry net profit for 2023 by 80% YoY.
By early April, spot rates on the trans-Pacific and Asia-Europe trade lanes were down roughly 90% compared with the same time last year. Contract rates have also fallen significantly. Asia-North Europe long-term rates are down 45% YoY and Asia-USWC rates are down 80%.
As a result of the falling rates, shippers on the two major trade lanes out of Asia are experiencing the largest year-over-year reduction in shipping costs in the last seven years. Some of Drewry’s customer have seen booking savings between $10 million and $200 million in contracted ocean freight rates compared with 2022.
Shippers are also experiencing improving service levels. Transit times on the east-west trades are twice as fast as a year ago. Additionally, congestion at major ports has decreased 50% in North America and 60% in Europe.
From 2016 to 2019, shippers took a cumulative loss of $8.5 billion on revenue of $681.2 billion, a -1.3% profit margin. In 2020, 2021, and 2022, the industry achieved profit margins of 8.1%, 36.8%, and 42.1%, respectively. Industry margins are now decelerating. However, many believe that 2023 will be another profitable year for carriers.
About O’Neill Logistics
O’Neill Logistics is a leading third party logistics provider. We operate in California, Savannah, New Jersey. We service many verticals including Garments, Fashion Accessories, Footwear, Furniture, Home Goods, & Electronics. Additionally, we offer omni-channel distribution and all value-added services. Lastly, we focus on retail “drop shipment” fulfillment and item-level fulfillment services with same-day service offerings.
O’Neill Logistics has over 2 million square feet of state-of-the-art facilities. Additionally, we offer dray services to support the warehouses and provide distribution to retailers and wholesalers. Our reliable 3PL platform combines sophisticated technology with robust, flexible processing designs and speed-to-market gateway models.
Lastly, we aim to simplify your supply chain. We deliver exceptional service and can optimize your operational performance. Therefore, we aim to build, protect and foster strong business partnerships.
Please reach out to us if you have any questions or need assistance with your logistics solutions!
