Cargo companies are canceling some sailings amid low demand for imported products.
The cost of shipping a container from Shanghai to Los Angeles has fallen 73% over the past year, data shows.
Consumer spending is changing and retailers are instead focusing on getting through their inventories.
Cargo ships are canceling sailings on key routes including from Asia to the US as inflation suppresses demand for imported products, according to a new report by The Wall Street Journal.
In the first two weeks of October, around 60 cargo-ship sailings from Asia to the US have been canceled, compared to an average of between four and eight a week most of the time, The Journal reported.
Shipping company MSC announced last week that it was temporarily suspending one of its services and instead merging it with another route "due to significantly reduced demand for shipments into the US West Coast during the past weeks." The Journal reported that the suspended route has the capacity to carry almost 12,000 containers a week.
This comes in stark contrast to the shipping chaos that started last summer and continued into early 2022, when ports were congested as high demand for goods coincided with labor shortages at ports and across the shipping industry.
Meanwhile, the costs of shipping a 40-foot container from Shanghai, the world's largest port, to Los Angeles and to New York have fallen 73% and 54% respectively over the past year, data from Drewry shows.
Rates have steadily been declining over the course of 2022, though they still remain elevated compared to before the pandemic.
"The global economy has thrown a few curveballs this year, and our outlook on future demand is uncertain and tepid," Jonathan Roach, a container analyst at shipbroker Braemar, told The Journal. "Overcapacity will likely become an issue from the middle of 2023 through to 2024 and potentially beyond."
The Journal reported that retailers building up inventories for the holiday period means that late summer and early fall are usually the busiest times for large carriers. But the current economic downturn has caused huge changes in spending, reducing demand for many goods. Inflation in the US is at 8.3%, according to the Bureau of Labor Statistics' consumer price index.
Meanwhile, some US retailers are struggling to sell excess inventory. Non-auto retail inventories were at just under $550 billion in July, compared to $451.5 billion in the same month in 2021, government data shows.
Macy's, Target, and Walmart are among the companies who said they were finding it hard to shift items that they ordered in huge quantities during the supply chain chaos and that were in high demand during the pandemic.
Walmart employees told Insider that their stores' back rooms were filled with pallets and outdoor storage trailers after being "slammed with nonstop freight."
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