ALL AT SEA – Impact of Covid-19 on shipping market globally
SHORTAGE OF CONTAINERS
“Now the problem is there are no containers. It is not because there is no business, but no containers, driving up shipping freight rates by 300% to 400%”
There are over 52,000 commercial vessels operating out at sea, often for months at a time. The shortage of containers is due to a rebound in economic activities in China, as well as the peak period demand for goods in the US and European markets owing to Christmas and New Year holidays. Since there is a high demand for the China-to-Europe routes, Port Klang’s position as the last port of call for vessels from China before they make their way to Europe means that they are often full and it is hard for us “exporters” to get a slot or booking of vessel. LOCKDOWN – Labours and chassis shortages have contributed to the ongoing congestion at US & Europe ports and this has been affecting other ports in the world whereby unpredictable sailing schedule / blank sailing and cancellation of port calling has been the biggest issue for all importers and exporters.
Empty container congestion has been a problem at major ports all around the world. This is a result of unprecedented consumer demand driven by a COVID-induced shift from spending on services to spending on goods. For example in Australia, the problem was exacerbated by weather events and industrial action. Carriers are being limited to their contracted container exchanges to recover schedules. The congestion of empty containers has been very high although it is now improving. It should be recognized by everyone that ocean carriers are doing all they can to clear the backlog and to keep international shipping containers moving through the supply chain.
ESCALATING OCEAN FREIGHT RATES!
Freight carriers are facing a shortage of shipping containers amid a wave of demand for delivery by sea, helping drive up rates and increasing supply chain costs. Ocean shipping lines are deploying sweeper and extra-loader vessels at a high financial cost, to help clear the empty container build-up. Shortage in container and vessel capacities, especially during the second half of 2020, has driven up container shipping freight rates by 200% for both import and export shipments.
The rates are expected to continue to go up because of the backlog of containers sparked by blank sailings and vessel delays. Container booking request was canceled by the shipping lines at the very last minute unless manufacturers were able to pay higher freight rates. For example, the freight rate to export to Australia ex-Port Klang has increased from US$1,200 to US$4,100 (300%). Shipping lines that used to give large importers more free-time to keep their cargo in the containers at ports to sustain business relations have now reduced the free-time window. “Shipping lines want the containers back from these importers for the next shipment.”
The COVID-19 pandemic and associated containment measures remain a fluid situation entirely outside of our control. We will continue to take all reasonable measures to mitigate the impact on our customers’ shipments. Nevertheless, certain service disruptions and/or delays may be unavoidable, for which we will not be liable and which may result in unforeseen extra costs/charges on the customer’s account. We specifically reserve all rights to use any alternative conveyances and routes to accomplish carriage and delivery at an alternative place in the event of a disruption.
In recognition of restricted capacity under these unprecedented circumstances, please note that otherwise agreed, customer schedules and prices may be subject to change and/or temporary surcharges may be applicable, subject to prior notice to Customer as circumstances may permit, to assist in mitigating any adverse impact.