Despite the current delicate situation caused by the COVID-19 pandemic, world trade is in full swing. This strong demand has a significant influence on the architecture of container transport.
The growing trade of goods is creating great challenges in managing containerized shipping capacity, which is reaching a level that our industry has never experienced before. The global capacity of 22 million TEU container ships is fully utilized; idle ship fleet has declined to less than 100 ships with a capacity of 350’000 TEU’s. Most of these vessels are dry-docked for maintenance, repair or installation of scrubbers to comply with IMO 2020 sulphur reduction regulations.
This situation has serious consequences on shippings coming from Asia:
– The most obvious consequence is the availability of vessel capacity. The market behavior of shipping companies varies: some respect existing space agreements, others open their capacity – on a first come, first served basis. One goes for all; vessels are full weeks in advance.
– Given the high utilization of vessels, the global container fleet is in service and, therefore, the availability of empty containers worldwide, but particularly in parts of Asia, is critical. Initiatives by shipping lines to reposition empty containers are underway, but will not be sufficient to meet the high demand.
– Freight rates are increasing rapidly and currently exceed US$5,000 per 40-foot container; the curve continues to rise.
All this comes down to the fact that moving goods by sea or rail from Asia to Europe has become less plannable for cargo owners. The situation will most likely not improve in the coming months.
Rest assured that we are making every effort to limit the pain for our clients and partners and that we will keep you informed of the evolution of the situation.
Idle Fleet Development
Shanghai Containerized Freight Index
Source: FIEGE International Forwarding, DynaLines