Recently, the four major shipping giants have successively made predictions about the later trend of the shipping market:
Maersk has revised down its trade shrinkage and extended its destocking forecast. There are still many challenges in the second half of the year;
CMA CGM, affected by uncertain factors (interest rate hikes, inflation, etc.), global growth has slowed down and the logistics and transportation market has been sluggish;
ONE, consumer behavior changes, international tensions arise, transportation needs and trade patterns continue to change, and the outlook is difficult to predict;
Evergreen, the market situation is different after the epidemic. Shipping merchants and cargo owners are going against the grain, the supply and demand imbalance is difficult to maintain, and the ups and downs are frightening.
In one sentence, the four major shipping giants predict that 2024 will be even worse. Unfortunately, the same may be true for the textile market!
Insufficient external demand makes it difficult to count on the US and European markets
Recently, textile people will see some trade information more or less. for example:
Data released by Descartes Datamyne showed that U.S. container imports in August reached 21.9 million TEUs (based on the number of ports of origin), a year-on-year decrease of 12.6%, but an increase of 0.8% from July.
Official data showed that retail sales in the euro zone fell by 1.2% month-on-month in August (expected to fall by 0.3%), and the previous value fell by 0.2%. Retail sales in the Eurozone fell by 2.1% year-on-year in August (expected to fall by 1.2%), and the previous value fell by 1%.
The World Trade Organization (WTO) stated that global trade growth will be “halved” in 2023. Global merchandise trade volume is expected to grow by 0.8% this year, less than half of the April forecast (1.7% growth).
Although the global economy continues to recover, the degree of recovery is less than expected and the process is slow and uneven. Especially in the United States and Europe, which have a high proportion of exports, under the influence of continued inflation and tightening monetary policies, coupled with geopolitical and other factors, the prospects for foreign trade have become increasingly bleak.
Data show that from January to August, the textile and apparel trade volume was US$211.65 billion, down 10.3% year-on-year, of which exports were US$197.66 billion, down 10.4% year-on-year, and imports were US$13.99 billion, down 9.7% year-on-year. The cumulative trade surplus was US$183.66 billion, year-on-year. down 10.4%.
As an export-dependent industry that relies “seven percent on foreign trade and three percent on domestic sales”, the textile industry has not been spared. The lack of strong support from foreign trade orders is undoubtedly a “wake-up call” for textile companies!
Overcapacity, the textile market is under internal pressure and external pressure
In addition to being deeply affected by external factors, the textile industry itself also has many potential risks.
In recent years, the textile industry has experienced a transition from crazy expansion to capacity transfer to blind production. Rapid development has made the problem of overcapacity intensified. Data show that as of the end of 2022, my country’s total output of chemical fiber filament fabrics reached 59.5 billion meters, a year-on-year increase of 6.82%. Unfortunately, the rising output cannot be reasonably consumed downstream, causing the relationship between supply and demand to further deteriorate.
This coincides with the situation in the shipping market. However, the shipping market can still cope with the difficulties by increasing freight rates, but the textile market seems a bit “inadequate”. After all, when the cost side was positive in the early stage, fabric prices only rose in a small range, and the overall price remained unchanged.
Market research shows that even in the traditional peak season, textile companies still lack large orders, and most of the orders are “small batches and multiple batches”. Due to poor order maintenance, price wars often occur in order to compete for orders. Due to the many uncertainties on the cost side, those orders with low profit or guaranteed capital are easily at risk of losses.
Relevant people said that the current involution is not limited to the domestic market, but the foreign trade market is also extremely involved. One order, dozens of quotes, as long as there is a small quantity, the price will be very high. Moreover, customers not only want cheap prices, but also want quality.
In this way, the textile market has gradually fallen into a vicious cycle, and profits may not be guaranteed.
In the past, everyone used to laugh at themselves and say that this year is the worst year since they started working in the industry. But at present, the textile market is full of difficulties. This year will not be the worst, it will only get worse every year! Some professionals have predicted that this period of pain in the textile market will last for 3-5 years. Let us wait and see whether it is true…
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