Global Shipping Update – September 2021
As of 1st September shipping lines have increased rates across the board. It was announced in the final hour as they were all watching each other to see how far they would push the rates up. One of the lines increased their export rates from Australia to Europe by USD 2000 per 20’container. We’ve seen import rates from China climb above the horrific USD10,000 mark as well… just crazy times.
We’ve been reading some news reports in the last couple of days in relation to this dire situation. We have diatribed about the situation previously but in our recent findings we think we now have a better understanding of the situation and the time it will take to get out of it. During worldwide COVID lockdowns, shipping lines pulled a large number of vessels from rotation and operated a number of ‘blank sailings’, essentially they anchored their vessels and ran a skeleton fleet. Leaving their working fleets small to try and save costs in what they thought would be a very long recovery to world trade, they didn’t understand that with government stimulus and online shopping that demand would essentially sling shot straight through previous volumes and into record breaking volume territory. They could not get their fleets back into rotation fast enough to cover demand, this meant that there were no vessels to fix container imbalances (move empty containers from USA and Europe back to Asia) and all vessels were being utilised to fulfil the demand of full container shipments. Most shipping lines currently have near 100% of their vessels utilised. The port of LA and Long Beach as of yesterday has 46 Vessels at Anchorage or drifting and 20 vessels in port. This is nearly 5 times pre COVID numbers, the Ports are beyond capacity. The forward bookings indicate that it is only going to get busier. This means that the carriers will have no option but to change ports or drop ports or change rotations of their vessels. They can’t have their vessels sitting idle as it has ramifications on costs and their worldwide schedules. This issue continues to exacerbate issues Globally, they can’t get empty containers out of USA/Europe to Asia, the demand for USA cargo will continue to rise as vessels can’t get in and retail fights to re-stock. This will affect all world trade and push rates, container shortages and schedule inaccuracy to another level.
Not pointing fingers here but it seems that the shipping lines took their foot off the gas for too long during COVID and couldn’t read the approaching tsunami of Global trade, their inability to read the room is debilitating importers and exporters worldwide. The Shipping Lines on the other hand are making more money than ever before.
All reports state that we will see changes early to mid 2022 and rates will move down again, we would suggest that the levels seen over the past few years will never be seen again but a new benchmark will be set, there will be space and vessels and Global Supply Chain can get back to its new normal.
All of us here at Willship International are on your side, we are going above and beyond to keep things moving and control the rates as much as we can. We all need to manage our expectations, understand and communicate the current environment effectively, help you plan accordingly, offer solutions, and most importantly – protect our relationships and support for each other. Delays and service failures are not about any lack of ability or efforts by the team at Willship International. They are more about the paralysis of the supply chain globally.
With the incredible increases in freight prices, our profit margins have plummeted, our team are working incredibly hard in a truly frustrating environment for an average of 2% profit on the freight charges. We are here to support you through this incredibly tough time and we hope that inturn we can count on our customers to support us at Willship International.
We hope everyone is coping in this crazy space we find ourselves in. If you ever need a conversation or help with Global Shipping issues, please do not hesitate to call us on 07 3267 3694 or reach out on email – firstname.lastname@example.org