Looking within a short-term horizon, the outlook for container shipping over the next 2-3 months appears relatively well-known, although certainly not well-liked by shippers. In essence, we will continue to see a situation of bottleneck problems, capacity shortages and high pressure on rates. This is, hopefully, not a surprise to anyone now.
The International Monetary Fund (IMF) has just published their new global economic outlook, and they have revised economic growth projections for 2021 and 2022 upwards. They now expect global GDP to grow 6.0% in 2021 and 4.4% in 2022. For the U.S, the growth expectation for 2021 is higher at 6.5%, while for China and India it is much higher at 8.4% and 12.5% respectively.
This means that strong container demand growth is anticipated to persist through not only 2021 but also 2022 based on these economic projections.
The very high freight rate level presently is sustained by severe bottleneck effects, and the problematic issue is that the ripple effects from the Suez incident will further postpone the ability to re-balance container flows as well as handle port congestion. In all likelihood, the bottlenecks might not be removed until sometime during Q3 2021 at the earliest and this might not be until Q4 2021.
Carriers do have more vessels on order and have placed orders for basically a million TEUs of vessel capacity over the past couple of months. However, these new orders will only be delivered in 2023-2024. This has caused charter rates for container vessels to grow rapidly. This implies that carriers expect a tight market for vessels in the next couple of years.
For Q3, and possibly into Q4, we will continue to see a very tight market in terms of capacity and freight rates will see a continued pressure to remain at very elevated levels. The main driver is shippers who in the present environment prioritize supply chain resilience more than transactional freight costs.
Coming into late 2021 and further for 2022 the bottlenecks will disappear, and a more normal supply/demand environment will emerge. This will cause a reduction in freight rate levels, but due to the continued strong demand growth and modest delivery of new vessels the reduction is unlikely to be at the same levels as seen before the pandemic.
Reference: morethanshipping.com
Disruptions in the Red Sea, Suez Canal, and Panama Canal have driven up shipping costs, sending shockwaves through the global economy.
It was truly heartwarming to see so many clients and associates visiting our stand, even as late as at the end of the show, sharing drinks and engaging in conversations.
Ocean freight rates on key global container routes have fallen again. Despite the upcoming Golden Week in China, which usually drives demand, the situation this year is slightly different, and the expected rate increase may not happen.
Highly potent active pharmaceutical ingredients (HPAPIs) are at the dangers of cross-contamination with other product forefront of pharmaceutical manufacturing. They are particularly common in targeted therapies and personalized medicines. This is primarily due to their potent therapeutic effects at low dosage forms.
The floating traffic jams off ports. The multiplying costs of moving freight. The resulting shortages of goods. All of this had seemed like an unpleasant memory confined to the COVID-19 pandemic. But no such luck!
An ocean container capacity crunch has hit global trade just as peak shipping season starts, with freight spot rates up some 30% over the past few weeks and heading higher.
The first joint Europe-wide assessment of the drivers and impact of chemical pollution by the European Environment Agency (EEA) and the European Chemicals Agency (ECHA) has concluded that, despite progress in some areas, “more work is still needed to reduce the impact of harmful substances on human health and the environment”. Key findings include:
The severe drought which has forced the Panama Canal, one of the world’s busiest trade passages, to limit daily crossings could impact global supply chains during a period of high demand.
In the early hours of March 26, the Singapore-flagged ship Dali, loaded with 5,000 containers, slammed into Baltimore’s Francis Scott Key Bridge, causing the 1.6-mile (2.5-kilometer) bridge to collapse in a matter of seconds. The Dali was departing for Colombo when the disaster struck. Initial fears were confirmed that half a dozen people lost their lives in the accident.