Demand for LCL (less-than-container-load) services is expected to continue to grow as ocean capacity tightens amidst widespread disruption caused by the pandemic and a war in Europe.According to Peter Sand, chief analyst and market expert at Xeneta, the ongoing war between Russia and Ukraine is slowing recovery. “When prices that affect energy go up it affects everything. Economic damage from the conf lict will contribute to a significant slowdown in global growth this year.”It’s a view that is supported by the International Monetary Fund, which has revised its global growth forecast significantly in the past few weeks. It now projects that global growth will slow down from an estimated 6.1% in 2021 to 3.6% in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January. Beyond 2023, global growth is forecast to decline to about 3.3% over the medium term.“Even as the war reduces growth, it will add to inf lation. Fuel and food prices have increased rapidly, with vulnerable populations – particularly in low-income countries – most affected. Elevated inf lation will complicate the trade-offs central banks face between containing price pressures and safeguarding growth. Interest rates are expected to rise as central banks tighten policy, exerting pressure on emerging markets and developing economies. Moreover, many countries have limited fiscal policy space to cushion the impact of the war on their economies,” reads the latest IMF economic forecast. “The conf lict adds to the economic strains wrought by the pandemic. Although many parts of the world appear to be moving past the acute phase of the Covid-19 crisis, deaths remain high, especially among the unvaccinated. Moreover, recent lockdowns in key manufacturing and trade hubs in China will likely compound supply disruptions elsewhere.”Sand highlighted that the headwinds were being felt on a global scale. “It is not only the war in Ukraine that is adding pressure to an already struggling logistics sector. The frequent and wider lockdowns in China, particularly in key manufacturing hubs, can and will cause more bottlenecks in global supply chains.”It has been clear for some time that the pandemic, in particular, has exposed the vulnerability of global supply chains. And with experts maintaining that the pressure will continue, many shippers are opting for LCL solutions and volumes are expected to see a steady increase going forward.At the other end of the spectrum, says Simon Heaney, Drewry’s senior manager for container research, large shippers with big enough buying power are opting to invest in their own shipping solutions. “A German retailer has recently bought its own liner and has indicated it is looking for tonnage, while there is also a Chinese furniture maker that has invested in a container vessel that I know of.”Online retailers such as Alibaba and Amazon have for some time been investing in their own logistics operations. Amazon, in particular, has been intent on developing logistics solutions, having bought its own f leet of aircraft.“It is a debatable strategy to purchase one’s own vessels in this current crisis,” says Heaney. “While it makes sense at the moment to protect a business from the craziness of the container market and ensure more predictable costs, it does come with the risk that you might find yourself with an expensive asset to maintain once the crisis is over.”
