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

More News
2022 | How the pharma industry is shaping up for the future
News · 17/01/2022

Given the evolving on-ground situation and newer variant-led infections, the pandemic is far from over. In such a scenario, for businesses to stay relevant, we will need to be flexible and more adaptable to the changes that need to be embraced to keep core business growth drivers resilient.

READ MORE
2022 | Chemical & Renewable Energy Industry Outlook
News · 06/12/2021

As the chemical industry moves into 2022, strong demand for both commodity and specialty chemicals should keep prices robust throughout the year. The industry could face margin pressures amid raw material cost inflation, which will likely remain high through the first half of 2022.

READ MORE
China’s strategic power cuts & “green” Winter Olympics 2022
News · 05/12/2021

Blackouts and power cuts in the world’s second-largest economy have drawn attention to fuel supply problems that could complicate the country’s pandemic recovery.

READ MORE
FIEO urges govt to provide freight support to all exports including pharmaceuticals till March 2022
News · 22/11/2021

The Federation of Indian Export Organizations (FIEO), an apex body of Indian export promotion organizations, has urged the government to provide freight support to all exports including pharmaceuticals till 31st March 2022, as freight rates have skyrocketed and are likely to somber by March 2022.

READ MORE
World’s First Pig Kidney Transplant Into Human Successfully Completed
News · 02/11/2021

Science keeps winning! Scientists recently transplanted a pig’s kidney into a human being without immediate rejection by the immune system.

READ MORE
WHO approves first Malaria vaccine developed by GlaxoSmithKline for children
News · 02/11/2021

In a landmark announcement, the World Health Organization (WHO) has recommended the use of the first-ever malaria vaccine for children. WHO Director-General Tedros Adhanom Ghebreyesus endorsed the RTS,S/AS01 malaria or Mosquirix – a vaccine developed by British drugmaker GlaxoSmithKline (GSK).

READ MORE
Power squeeze curbs Chinese growth, leaves Europe in a gas bind
News · 02/11/2021

China’s power shortages hit growth in the world’s second-biggest economy, threatening more pain for global supply chains, while Europe’s gas squeeze looked set to continue as Russia’s Gazprom showed no sign of hiking exports to the region in October.

READ MORE
Generic Agrochemicals in India Poised for a Bonanza: 22 Molecules Coming Off Patent by 2030
News · 04/10/2021

The fact that 22 such molecules are going to come out of their patent period will substantially expand the offerings of the Indian companies to people at home and abroad alike and may help fetch extra revenue.

READ MORE
SARS-CoV-2 is not a direct food safety concern… Neither food nor food packaging is a pathway for the spread of COVID-19, says FAO
News · 04/10/2021

“Current data indicates that neither food nor food packaging is a pathway for the spread of viruses causing respiratory illnesses, including SARS-CoV-2,” according to a new guidance document from the United Nations’ Food and Agriculture Organization (FAO): “In other words, SARS-CoV-2 is not a direct food safety concern.”

READ MORE