Maersk Asia Pacific market update (December 2022)

Keep your cargo sailing smoothly, with valuable insights from our Asia-Pacific Market Update for December.

As 2023 approaches, the outlook is more pessimistic than optimistic as the possibility of a global recession weighs on sentiment. Falling trade growth, tighter monetary controls and weakening consumer demand all point to a tougher start to the New Year for the container shipping sector. But there are some bright spots too – port congestion especially in Europe and North America has been eased, largely ending the supply chain bottlenecks and disruption of the last couple of years.

China has also lifted virtually all its COVID-19 restrictions after abandoning its zero-COVID-19 policies of the last three years, raising the prospect of a trade resurgence, despite of a foreseeable impact of soaring positive cases.

Market Trends

Global growth continued to stall in November with key indicators all sliding. The Global Composite Purchasing Manager’s Index (PMI) nudged lower to 48 in November against 49 the previous month while the manufacturing orders-to-inventory ratio also slipped from October’s level suggesting the growth momentum deteriorated further. Manufacturing export order were again flat.

Inflationary pressures are still causing concern despite the possibility headline inflation in the US and Europe has peaked due to lower energy prices. Central banks, including the US Fed, continue to raise interest rates to rein in inflation although there are worries such action could plunge leading economies further into recession.

Trade Outlook

Cargo demand remains weak and this is expected to continue into 2023 due to a combination of high inventory levels and the likelihood of a global recession that could already be underway. Latest figures show container volumes continued to fall in most regions in July-September compared with the same period last year but were particularly weak on European and Asia trades. North American imports and West Central Asia exports were also witnessing certain level of decreasing.

Global container volumes fell 4.3% in July-September compared with a year earlier. The biggest fall was in intra-Europe volumes which crashed 12.5% in July-September from the previous year, followed by North American imports which dropped 9.3% and Asia imports which slumped 7.6%. But Oceania – Australia and New Zealand – was one of the few bright spots with export volumes growing 5.3% and imports rising 4.9% in July-September from a year ago.

Port delays in Europe and North America are also easing with Clarksons port congestion index for northern Europe and the US West Coast both seeing an improvement in congestion levels. Ocean spot freight rates are also falling and are now below those seen in the second half 2020 and are moving closer to pre-pandemic rates.

Trending Topic

Global Beef Trade is on the rise with an increased demand for beef imports in China. In the first three quarters of 2022, China imported 1.69 million tons of beef from all over the world, an increase of 200,000 tons from the same period in 2021. As of right now, the price of beef in the Chinese market stands at 65.80 Chinese Yuan per kilogram (equivalent to around 9.50 USD per kilogram), which adds up to only a one percent rise within the last year.

Meanwhile, across the equator in New Zealand, the export of protein has boomed. For example, in the single month of August 2022, New Zealand ports shipped 885 million USD worth of red meat, mostly to their three key markets of China, the United States, and Japan; a 34% increase since 2021. According to the Meat Industry Association, the import of beef to China from New Zealand has increased 49%. This means that monthly, China imports nearly 24,000 tons of beef from New Zealand, a record high that has not been seen since June 2019.

Click here to find out the factors leading to this current situation

Maersk will continue its efforts to digitise the supply chain and increase industry innovation through other solutions to reduce trade friction and promote more global trade.

Key Market Outlook Across Trade Lanes

Vertical Insight: Auto

The global automotive manufacturing is projected to grow to US$ 2.95 trillion in 2022 the market is recovering from 2020-2021, but it is rather slow and still under 2019 market size.

Among the global automotive manufacturers, 4 out of the top 15 OEM/Fully Built Car manufacturers, and 3 out of top 7 T1 component manufacturers are from Asia Pacific mostly from Japan and South Korea.

Japan and China are one of the key markets for both export and import (strong in both manufacturing & consumption); South Korea and Thailand are a big market for Export (strong in manufacturing) while Australia stands out from Import side (strong in consumption).

Thailand is the 13th largest automotive parts exporter and the 6th largest commercial vehicle manufacturer in the world, and the largest in ASEAN, which accounts for nearly 12% of the country’s economic growth and employs more than 500,000 people. Over a period of 50 years, the country has developed from an assembler of auto components into a top automotive manufacturing and export hub. Nearly, all top Japanese (30 companies) and Global (32 companies) component manufacturers have their production base in Thailand.

Thai automotive supply chain is highly domestic and intra-Asia. For the domestic market, nearly 60- 70% of components are consumed domestically. Even for 30-40% imports, 58% of them are sourced from the neighboring Asian countries (Japan, China and Indonesia). When exporting the auto parts, 1/5 of them are as well exported to the neighboring Asian countries (Japan, Indonesia and Malaysia).

From 2019, the automobile production started falling with stagnating or contracting consumer demand; shifting from combustion engine to electric vehicle is expected to reignite global market growth.

In this transition, 4 out of the top 10 EV manufacturers come from Asia Pacific countries (led by China and South Korea), which reconfirms the importance of APA region for the growth and future success of Maersk.

In this transition, 4 out of the top 10 EV manufacturers come from Asia Pacific countries (led by China and South Korea), which reconfirms the importance of APA region for the growth and future success of Maersk.

The semiconductor shortage has escalated to impact all major OEMs and automotive manufacturing regions. The Society of Motor Manufacturers and Traders (SMMT) shows a decline of 99, 211 cars (32.4%) in the first three months of 2022 due to the semiconductor shortage plaguing the industry. Many industry experts now expect the shortages to persist throughout 2022 and into 2023, leaving little prospect to recover volumes.

While the chip shortage is the biggest headline, the industry is facing other upstream supply issues that could persist. There are shortages in commodities from leather and fabrics to steel and rubber, often because production has struggled to recover to pre-pandemic levels. Competing demand from other recovering industry verticals has also hurt automotive supply. Global surges in energy costs could even lead some smaller or niche suppliers to ration production. There are concerns of factory stoppages in China, for example, as the country tries to reduce coal consumption.

You can find solutions here to help remove the roadblock from your automotive supply chain. Please click here to find more insights that help steer your way to the UPSIDE of automotive change.

All Nippon Airways will adjust its US and East Asian routes from December with an increase in the number of flights between Narita to Chicago, Shanghai, Beijing, Taipei and Incheon but a reduction in flight frequency to Los Angeles and Bangkok. The approach of the New Year holidays is likely to see a reduction in the number of air cargo related flights.

Japan Airlines saw a 13% reduction in international air cargo volumes to 41,000 tons, the fourth straight month of declines.

Japan: Container drayage capacity is stable although we expect a peak season before and after the New Year. Construction on the Tokyo-Nagoya highway is causing delays with can affect delivery times in the Kanto/Tokai areas.

Philippine: Vessel waiting times at the Manila terminals have increased to an average of 2 days due to bad weather and the pre-Christmas and CNY peak season. The delays are expected to increase as most industries prepare for the holiday break and ports close for 24- hours for Christmas and New Year.

Major Ports Update

Vessel Waiting Time Indicator

Remark: Numbers are dynamic and subject to change.

Resources and tools to support you

Visit our “Insights” pages where we explore the latest trends in supply chain digitization, sustainability, growth, resilience, and integrated logistics.

Learn what’s happening in our regions by reading our Maersk Europe, North America and Latin America updates.

Visit us at Maersk.com to handle everything from “Last Free Day” to online payments.

We value your business and welcome your feedback. Should you have any questions on optimizing your cargo flows, please contact your local Maersk professional.