© Khunaspix Dreamstime.

Here’s the latest, monthly ocean freight market update published by DHL Global Forwarding:

Surprising turnaround: capacity demand peaks despite COVID-19

Looking back, the lockdowns in many countries severely impacted consumption, industrial production and, in a ripple effect, world trade. In expectation of stagnating and decreasing volumes, carriers issued profit warnings and started to reduce drastically their offer on numerous long haul routes through services closures, loop mergers and successive blank sailings.

Then, as the lockdowns were eased in several countries, demand started to rise without rational explanation at first sight. This prompted carriers to resume suspended loops and organize extra loops that progressively mopped up most of the surplus capacity. The inactive fleet as fallen to around 430,000 TEU as per late October’s count (1.8% of the world fleet), down from a peak at 2.70 MTEU at in late May (11.6% of the world fleet).

The reason for this sudden resumption in container shipping demand are multiple : a catch up effect, dislocation of air freight markets benefiting seaborne transport, a hefty rise in demand for hygiene products, and people spending money on consumer goods rather than travelling. Government’s efforts to avoid economic meltdown and a loss of confidence have so far paid off. With the 2nd wave which arrived in many countries, uncertainties are growing however. Visibility is low. Liner operators are taking advantage of the moment. Spot rates are at all times highs on several key trades. Carriers have so far resisted the urge to increase the speed of their vessels to augment their transportation capacity.

To download the full presentation, please click here.

Comment on this article

You must be logged in to post a comment.