The impact of Covid-19 on the global shipping market is clearly evident in the shortage of containers coupled with a rebound in demand for goods – all of which is driving freight rates to unprecedented levels.Jochen Gutschmidt, vice-president of advisory services: global supply chain at Sea-Intelligence, said there was an unprecedented demand for containers. “Volumes are up and they will remain high for the foreseeable future. Demand is strong and competition out there is rife. It has without a doubt turned into a seller’s market.”Speaking during an online event he said there was clear evidence that the market was being driven by the pandemic as consumers were forced to stay home due to lockdowns and other quarantine regulations. “The simple explanation is that people can’t go out and so the money saved on restaurants and other entertainment is being channelled elsewhere into their homes and such. And whatever they are buying is being moved in containers.”Strong export traffic from China was at present outstripping imports, resulting in a container conundrum, while congestion at several hubs around the world was exacerbating the situation.Michelle Horner, trade lane manager at CFR Freight, said a major issue was the lack of container availability and the soaring freight and surcharge costs being applied. “Global port congestion, changes in vessel schedules, and transhipment port delays have resulted in extended lead times and transit times, increasing the need for cargo to move to final place of delivery within very restricted time frames. This has affected the road and rail transport systems across the world, leading to noticeable delays as well as increased cargo levels in depots and warehouses.”According to Gutschmidt, it was important not to underestimate the market changes, considering that shipping lines had for years not earned any significant returns. He said they were all out to take what they could get at present – and carriers had also become far more savvy about adjusting capacity to demand.He said it was doubtful that the current rates were sustainable in the long term. Using the Far East to North European corridor as an example, he said the average market rate for a 40-foot container had increased by 446% to $7 672 compared to a year ago. At the same time global vessel schedule reliability had deteriorated, with the latest Sea-Intelligence report indicating 23% reliability at present. “That means only 23% of vessels arrived on time or one day early or one day late. The only certainty that shippers have at present is that their cargo will not arrive on time.”Another interesting development, said Patrik Berglund, CEO of Xeneta, was how carriers were pushing harder for NVOCCs to offer differentiated pricing directly to shippers versus what they were offering through the main account contracts to the forwarders.
