Container transport sector navigates COVID pandemic
08 February, 2021
Maritime container freight shipping is steaming ahead through the COVID-19 pandemic, boosted by good demand for Chinese exports and a good shortage of vessels according to industry experts.
The Freightos Baltic Global Container Index (FBX), which tracks the price tag on container shipping, has nearly quadrupled for the China-Europe route since early November to stand at $7,827 on Friday.
The FBX reading for containers from China bound for the west coast of america has practically tripled since late May to $4,286 on Friday.
"The costs of shipping goods from China to Europe by water possess strike unprecedented highs recently," said UniCredit Lender economist Andreas Rees.
That is due to rampant demand for China's made goods, particularly for medical equipment through the global health crisis -- also for consumer products from lockdown-bound populations.
"First, demand of medical products produced in China have already been strongly rising. Second, and probably extra important, consumers have been re-allocating their demand," said Rees.
"Instead of likely to restaurants and vacationing, they have already been demanding stronger goods such as electronic equipment, furniture, etc, to get a nice home. And many of the goods are produced in China."
That has had a good knock-on effect on demand for the gigantic container ships that transport vast amounts of things from the Asian powerhouse.
"Container shipping costs are actually soaring from Asia, not just to the UK but to many locations for shipments out of China and Asia," Braemar analyst Jonathan Roach told AFP. "With an increase of resilient demand, container demand possesses increased exponentially."
Even so, the pandemic did as well spark a standard 4.1-percent decline in world maritime trade this past year, according to new estimates from the US Conference in Trade and Development.
Bottlenecks experience however been created across the sector due to strict Covid-19 hygiene and sanitation measures found in ports, logistics centers and storage area depots worldwide.
The turnaround time taken between unloading a container ship and returning has therefore more than doubled, according to Roach. That additionally limits the available pool of vessels.
"When there exists a delay in delivery empties back again to loading hubs and once as a cargo surge, availability of empty container apparatus will tighten," Roach added. "We anticipate this imbalance (between source and demand) to continue while strict COVID-19 restrictions remain in place."
Rising transportation costs can meanwhile feed through in to higher consumer rates and spark concern among global central banking institutions, which keep close track of building inflationary pressures.
"There continues to be the question of whether and which extent companies can spread higher prices to buyers," noted Rees. "Currently, only a average cost-push to consumer price inflation seems likely. However the pattern certainly should be closely monitored."
Embracing the outlook, Roach continues to be upbeat as a result of growing global COVID-19 vaccination drive.
"We do expect (buyer) spending to normalize as the vaccine rollout gathers pace -- and a correction in the spending move should normalize freight demand. We anticipate that to occur towards the center of 2021."
Source: japantoday.com
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