Global freight volumes indicate signs of stabilizing in the first quarter of 2023, indicating that the manufacturing and freight industry cycle is nearing its bottom and may provide support for oil prices later in the year. The global cargo volume fell by 1.1% in Q1 of 2023, compared to the previous year. However, volumes rose by 0.2% YoY in March, showing early signs of the cyclical bottom being in place. Singapore’s sea container throughput rose to a record 3.26 million TEU in April, the highest in a year, and Heathrow Airport’s freight dropped by only 7% YoY in Q1, a much smaller drop than the ones seen in the previous quarter.
U.S. railroads transported 3.1 million shipping containers in Q1 of 2023, compared to 3.4 million in the same period in the previous year. U.S. trucking companies reported that activity levels fell less than 1% in Q1 of 2023, but the quarter ended with a weak note with a 5% decline in March. At the nine largest US container ports, the number of shipping containers handled fell by 16% in April and 17% in the first four months of 2023.
Global container shipping, after a year of continuous decline, has been stable since mid-March due to more stable demand. Although the latest data shows signs of improvement in the freight market, corporate inventories remain high in North America and Europe, lagging impact of interest rate hikes, tighter credit conditions, and rising unemployment.
To be a turning point for the freight and manufacturing industry, inflation needs to ease soon to stave off pressure for higher interest rates and a further downturn in industrial demand. A trough in manufacturing and freight activity could stabilize consumption of diesel and other distilled heating oils in major economies, providing support to oil prices. Lower crude oil, gas, and electricity prices would ease pressure on consumer purchasing power and business investment, containing renewed prosperity.
In conclusion, global freight volumes suggest signs of stability in the first quarter of 2023, which could be the turning point for the manufacturing and freight industry cycle, providing support for oil prices. However, inflation needs to decrease, and corporate inventories need to stabilize to prevent the industrial demand’s further downturn.