Freight rates are falling but so are orders

On average, purchasing volumes fell by 18 percent but freight costs were lower. Transporting a 40-foot standard container from Asia to the North Sea ports can now cost less than $1,200. By comparison, during the Covid-19 pandemic, importers had to pay up to $16,000 to transport a box, and up to $20,000 at short notice.

There have also been geographical changes in fashion imports. In Bangladesh, for example, approximately the same quantities have been ordered as in the same period of the previous year. Suppliers in Vietnam are even producing slightly more in 2023. On the other hand, in China companies are ordering around 3.5 percent less to ship to Europe than in the same period last year.

Setlog does not expect the situation for companies to change quickly: “High inflation, rising interest rates and the recent poor economic forecasts by the International Monetary Fund IMF are not causing consumers to fall into shopping euphoria,” says Ralf Duester, member of the board of Setlog.

However, it is unlikely that higher prices in purchasing in Asia and Southeastern Europe will lead to a relocation of production to Western Europe, because production and labor costs are even higher than before the war in Ukraine.

The easing in the sea freight market has at least one advantage for importers: They can change their orders at shorter notice than during Covid-19.

Compared to 2021 and 2022, containers from the Far East are being transported to North Sea ports eight days earlier on average, with significantly more on-time deliveries due to improved planning. On average, companies should expect a transit time of 35.4 days according to Setlog. Compared to the pre-Covid-19 times, however, there is still room for improvement. In 2019, the transport time was only 31 days.

Post-carriage, i.e. the transport time of containers from the ports to the warehouses by rail or road, has also improved, according to Setlog’s evaluation, decreasing from an average of eight days to 5.7 days.