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International Shipping
Reality of ocean container volume far from China reopening hype
Date:2023-05-24 Readers:
WITH the anticipation of a significant boost in ocean container demand following the lifting of Covid crisis restrictions and lockdown measures in China, hopes for a reopening and increased volumes have started to fade, reports New York's FreightWaves.
The current focus is on the challenge of inventory destocking and when this phase will be completed it could lead to China-to-US container demand.
To gain a better understanding of the inventory replenishment cycle, we can analyze the average volume of containers per booking from China to the US.
It illustrates the monthly average of TEU per booking from January 2022 to the present.
This metric serves as an essential indicator of the different stages of the replenishment cycle and explains why import demand experienced a sharp decline in mid-2022.
By examining this ratio, it becomes apparent that importers, such as Samsung, were reducing purchase order quantities while aiming for a similar number of bookings but with a lower overall TEU volume per booking.
The signal for a new replenishment cycle for US importers would be a ratio surpassing an average of two TEU per booking.
However, the current reading is at its lowest level since early 2019, at 1.7 TEU per booking.
It is becoming increasingly evident that the reopening of China is unlikely to result in a surge in container volumes in the near future.
Key economic indicators for Chinese manufacturing paint a challenging picture for the ocean container market, particularly concerning US containerized import volumes in the second half of 2023.
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