Market Update – 14th July 2023

China’s exports have plunged the most in three years as higher interest rates worldwide constrict global trade. 

As the world’s biggest exporter, China is considered a bellwether country when it comes to the global economy. After a 7.5% decline in exports in May, there was already a challenging outlook ahead. 

Now, with exports falling 12.4% in June, expectations are even lower. And Chinese imports aren’t much stronger, falling 6.8%. 

Although this is part of larger global story. Central banks in North America, Europe and Asia have hiked the cost of borrowing to bring living costs under control after inflation in many countries reached its highest levels since the 1980s. 

Add to this the complex relationship between the US and China at the moment, with the former still applying trade restrictions over the latter, and the decline makes sense. 

Whether tensions will ease, and the global economy will grow to boost outlooks remains to be seen.  

In other news: 

Land:    

• China-Europe rail freight volumes have rebounded this year, up 30% on the first half of 2022 and six months on from Russia being the only thing halting a collapse in traffic.    

• The European Commission unveiled a package of laws on Tuesday aimed at slashing the carbon footprint of the freight sector, cutting red tape in the transport of goods across borders, and cracking down on greenwashing. 

• The EU wants to slash emissions from transport by 90% by 2050 by getting cargo off of CO2-emitting trucks and on to much cleaner railways and barges.

• The Road Freight Association (RFA) has warned against the impact of the attacks on the road freight sector. This follows the recent attacks witnessed, with the most recent in the early hours of July 9 when trucks were set alight on the N3.  

Air:    

• Cargo airlines have expanded their networks out of India in recent years due to the surge in e-commerce.    

• Air freight trade from India is coping with demand shocks from the US and Europe, but it also faces domestic challenges of taxes and poor infrastructure. 

• The EU wants to slash emissions from transport by 90% by 2050 by getting cargo off of CO2-emitting trucks and on to much cleaner railways and barges.

• Airlines are taking big risks in the air cargo market to try to keep traffic even though fares have fallen 41% from last year. The global spot price is currently $2.31 per kg. 

Sea:    

• In addition to hiring suspensions and general budget cuts, shipping companies have also started suspending tonnage charters.

• Spot rates for transatlantic containers plummeted this week, dropping more than 20% of their value, putting pressure on other previously resilient trade lanes as shipping lines injected more capacity. 

Industry news   

Ukrainian importers are suffering from high storage costs and delivery delays as logistics companies still fear losing necessary documents and containers.

Two people were killed and one missing after a massive fire broke out on Friday at the Pemex-operated Nohok Alfa offshore platform in the Cantarell oil field in the Gulf of Mexico.

The second quarter saw significant changes in supply chains as Mexico overtook China to become the largest exporter to the United States, with significant impacts on logistics infrastructure and labour.

CHINA asked IMO to allow authorities to retroactively change already submitted emissions data.   

Looking forward      

That’s it for this week’s report, if you have any questions about the stories covered today or need support with your current supply chain, please get in touch.