By Jennifer Chang      

A slowdown in global trade has weighed on shipping demand, with empty containers piling up at major ports around the world. During the COVID-19 pandemic, the shipping capacity of the global shipping industry was tight, and even empty containers were hard to find. Now the situation has changed to ship waiting for cargo. As shipping demand has slowed, freight rates have also fallen. Meanwhile, shipping prices on key global trade lanes have fallen 85% from record highs as rising costs of living hit consumer spending and supply chain disruptions from the previous pandemic have eased.

The spring of 2023 has arrived, but foreign trade has entered a cold winter, Asian foreign trade orders have disappeared in large numbers, and empty containers are piling up in ports. Who took away our orders? First of all, the global market demand is weakening is the main reason, 2022 the United States to take the lead in raising interest rates, why to raise interest rates? In order to stimulate the economy, the U.S. directly issued money to the people and enterprises, resulting in high inflation, in order to suppress inflation, the Fed began to raise interest rates, interest rates will lead to the circulation of money in the market into the bank, not issued money in the hands of the people no money. The U.S. dollar is the global circulation currency, the U.S. dollar rising interest rates on the global economy has a great impact, driven by the dollar rising interest rates, many countries in Europe also followed the rise in interest rates, on the one hand, high prices, on the other hand, no money in hand. From the supply and demand point of view, Europe, the United States is a typical consumer countries, consumption capacity is very strong, while China, Vietnam and other Asian countries are production-oriented, foreign trade export orders mainly from Europe and the United States. People in developed countries in Europe and the United States reduced consumption, which led to a decline in foreign trade orders from Asian manufacturing countries.

Recent data shows that the U.S. economy is in a recession facing a serious situation. According to the report, in the first two months of this year, U.S. container imports fell by 20% compared to the same period last year, a figure that signals a significant decline in consumer spending rates, accounting for 68.5% of the U.S. GDP, consumer spending has shown a clear trend of recession. The analysis pointed out that the rising inflation rate in the United States and the gradual rise in interest rates have caused an increase in the real economic burden, especially for low- and middle-income households. This has further led to a continued reduction in their spending power, which has correspondingly affected U.S. performance in the international trade market, mainly in the form of declining trends in container imports and exports. Many economic experts and market analysts have warned of these risks, and these signs point to a growing likelihood of an economic slowdown. Although there has been no official announcement of a recession, this is likely to become a reality in the coming months.

Appreciate if you could share TGL Blog among your friends who are interested in first-hand market information of supply chain and updated economic incidents.