Container shipping sector navigates COVID-19 pandemic
07 February, 2021
Maritime container freight delivery is steaming in advance through the COVID-19 pandemic, boosted by good demand for Chinese exports and a good shortage of vessels according to skillfully developed.
The Freightos Baltic Global Container Index (FBX), which tracks the price of container shipping, has practically quadrupled for the China-Europe route since early November to stand at US$7,827 on Friday.
The FBX reading for containers from China bound for the west coast of the United States has practically tripled since late May to US$4,286 on Friday.
"The costs of delivery goods from China to Europe by water possess strike unprecedented highs recently," said UniCredit Lender economist Andreas Rees.
That is because of rampant demand for China's produced items, particularly for medical apparatus through the global health emergency - but also for consumer things from lockdown-bound populations.
"EXPONENTIAL" DEMAND INCREASE
"Earliest, demand of medical goods produced in China have already been strongly rising. Second, and probably more important, consumers have been re-allocating their demand," said Rees.
"Instead of likely to restaurants and visiting, they have already been demanding stronger goods such as for example electronic equipment, furniture, etc, to have a nice home. And several of the goods are stated in China."
That has had a good knock-on effect on demand for the gigantic container ships that transfer vast amounts of merchandise from the Asian powerhouse.
"Container shipping costs are actually soaring from Asia, not merely to the UK but to many places for shipments out of China and Asia," Braemar analyst Jonathan Roach told AFP.
"With increased long-lasting demand, container demand features increased exponentially."
On the other hand, the pandemic did as well spark a overall 4.1 % decline in world maritime trade this past year, regarding to recent estimates from the US Conference on Trade and Creation.
Bottlenecks have got however been created over the sector due to strict COVID-19 hygiene and sanitation measures found in ports, logistics centres and storage area depots worldwide.
The turnaround time taken between unloading a container ship and returning has therefore increased significantly, according to Roach. That further limits the available pool of vessels.
"When you will find a delay in delivery empties back again to loading hubs and once as a cargo surge, option of empty container tools will tighten," Roach added.
"We expect this imbalance (between source and demand) to keep while strict Covid-19 restrictions stay in place."
INFLATION FEARS
Rising transportation costs may in the mean time feed through into bigger consumer prices and spark concern among global central banks, which preserve close tabs on building inflationary pressures.
"There continues to be the concern of whether also to which extent corporations can pass on higher prices to buyers," noted Rees.
"Currently, only a average cost-push to consumer price inflation seems likely. But the pattern certainly has to be closely monitored."
Embracing the outlook, Roach remains upbeat due to the growing global COVID-19 vaccination drive.
"We do expect (client) spending to normalise as the vaccine rollout gathers tempo - and a correction in the spending change should normalise freight demand. We anticipate that to happen towards the middle of 2021."
Source: www.channelnewsasia.com