Due to the current market situation, there is a strong increase in rates as well as a capacity bottleneck. Here you can find out everything about the background.
Current Market Situation
The COVID-19 crisis as the trigger
Around the planet, the pandemic has disrupted trade to an extraordinary degree driving up the cost of shipping goods and adding a fresh challenge to the global economic recovery. The virus has thrown off the choreography of moving cargo from one continent to another.
At the center of the storm is the shipping container, the workhorse of globalization.
We have witnessed a sharp decline in the volume of goods being shipped in Q2 2020 as a result of China suspending trade and the subsequent restrictions in both Europe and the US.
Fearing the dramatic reduction in goods requiring transport, shipping companies began taking several measures to withdraw capacities (loop redesign, void sailing, grounding fleets, vessel’s scrapping, freeze of new ships & containers orders), bringing the schedule reliability to an absolute lowest level ever.
As the emergency caused by the pandemic seemed to be nearing its end in Asia, and particularly in China, with infections dropping to near zero, the restrictive measures previously taken in Europe and the US were rolled back at the start of the summer.
Inventory level reached their absolute lowest level in Q3 2020, and forced retailers to massively proceed with heavy replenishment (mainly in household products, electronics & sport items) in order to respond to unprecedented and unexpected rise in demand.
Due to the heavy growing demand, US West ports have been facing a huge increase in Q4 2020 creating heavy congestion caused by limited infrastructure, missing cranes, etc.
As the buffer Chinese New Year volume is on the way to be absorbed in China, there is still huge shortage of equipment in many countries in South East Asia.
As side effects, situation is highly challenging in all major trades : TransAtlantic, Latin America, & Middle East. Nobody, knows how long this will last. Will the vaccinations increase bring back the normal life? But even so, retailers will have to quickly to replenish their inventory again for the coming new holidays season.
The main and only element we might suggest you, is to plan & forecast well in advance your future booking, share it with us earlier as possible with us in order to secure equipment & space as much as possible.
The actual suez canal sitaution which is on the way to be solved, has also influence on the FEWB/ FEEB trade by affecting more than 200 vessels at this day. More information are available here.
To illustrate the situation, we have prepared a short video that you can find here.
What is a “good” and “ competitive” seafreight rate today ? The correct question is: what are the cost of missing sales ?
Agile organizations will use this crisis to win markets by having their products
- In the right place
- In the right quantity
- At the right time