circus artist Photo 39809468 © Rui Matos
© Rui Matos

Two vastly different scenarios could lie ahead for ocean freight, both of which are equally plausible, according to leading industry analyst Lars Jensen.

At an Air & Ocean Freight Outlook webinar, organised by Danish forwarder Scan Global Logistics last week, the CEO and partner at Vespucci Maritime said there was a case for a very strong end to the year – but in another scenario, consumers stop spending.

“We’re beginning to see Shanghai re-opening and we might also be faced with an early peak season,” he said. “Keep in mind, the supply chain right now still takes two months longer than normal.”

In his first scenario, peak season should have already started, or be about to start, and the past three months would have been the low season.

However, the industry was unable to address the chronic congestion in ports around the globe, which remains as bad as last year’s peak season.

“So, even if there is just a normal peak season ahead, we could see rapidly worsening port congestion, he said, “and the market could very easily see in the coming months a repeat of 2021 – meaning spot rates will exceed $20,000/feu.”

But if consumers stopped spending on goods, partly due to inflationary pressures and concerns over the war in Ukraine, or see a shift back to spending on services instead of goods as the pandemic’s effects recede, the outlook changes.

“If consumers do stop spending, the importers have a problem because their supply chains are two months longer than normal. They will react very quickly by cancelling production orders, which will cause a massive drop in container demand. Ships will suddenly be wide open, with plenty of space. We’ll see blank sailings and rapidly dropping spot rates.”

Mr Jensen said both these near future scenarios were equally likely.

He said: “The problem is we can currently find data to support both. It all hinges on what consumers are going to do – or rather, what importers think the consumers are going to do.

“We have to see spot rates increase in the next two to three weeks, if the first scenario is to prevail. The reason is that if there is any kind of peak season, it will happen now and, given that vessels are already full, there should be an increase in spot rates.

“So, if we do see spot rates stronger than normal in the coming weeks, then prepare for a repeat of the 2021 scenario.

“On the other hand, if spot rates flatline, or even start to decline in the next two to three weeks, that is a sign we’re getting into the downturn scenario, and that will be a very, very different ride from one which produces a strong peak season.”

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