Traders placed fewer production orders with their suppliers compared to the previous year, leadingto an average decline of 18% in the quantity of orders. Therefore, the outlook for sales is subdued. However, low transport costs are having a positive effect: Freight rates for sea freight containers form the Far East have stabilized at a low level, unlinke the high costs during the Covid-19 pandemic. Depending on the route, freight rates for 40-foot containers can drop below 1,200 Dollar.
Setlog also evaluated the geograhical changes in fashion imports: In Banglasdesh, for example, the number of pieces ordered is almost the as in the same period last year. Suppliers in Vietnam are producing slightly more in 2023. China, on the other hand is the loser: Companies in the Middle Kingdom are ordering around 3.5% less to Europe than in the same period last year. “The geopolitical situation is contributing to the fact that suppliers in China tend to receive fewer orders. In contrast, suppliers in Vietnam or even India are benefiting,” emphasizes Ralf Düster, member of the board of Setlog.
The supply chain expert does not expect the situation for companies in his country to change abrubtly. “High inflation, rising interest rates and the recent poor economic forecasts by the International Monetary Fund IMF are not causing consumers to fall into a shopping euphoria,” says Düster.
The results of many importers of clothing, toys, computers, and other goods will be diminished in the second half of this year not only due to lower demand but also due to higher purchasing prices. Setlog already observed price increases between 8% and 15% in Asia and Southeast Europe, including Turkey, in the previous year.
The easing in the freight market market has at least one advantage for importeurs: they can modify their orders more quickly than during the times of Covid. Compared to the years 2021 and 2022, containers from the Far East will be transported to the North Sea ports eight days earlier on average.