Sea Freight Market valued at 58 BEUR in2019 is estimated to be valued at 77 BEUR by 2027.
The largest container shipping companies (Maersk, MSC, CMA-CGM, COSCO, HAPAG-LLOYD) expect the global market to continue growing and now forecasts full-year demand growth of 5-8%, driven by the demands in ocean freight bookings. Covid-19 related delays at ports and shipping capacity management problems have led to congestion at peak times and a shortage of empty containers.
Waiting time for freight forwarders to enter overcrowded ports has extended. The time container ships are spending waiting for port berths more then doubled since 2019. The Suez Canal blockage incident & temporary closure of Yantian port in May and Ningbo port in August had only added to the troubled transportation market. Global supply chains dependent on sea freight transport faced compounded delays and further disruptions to already caused trade & freight disputes, natural disasters & weather conditions, pandemic lockdowns, leaving a backlog of inbound and outbound cargos to be cleared. Delays are common in the container freight market, with schedule reliability coming to below 40% (of vessels arriving on time). In addition, surges in demand for commodities and their transportation, staff shortages, medical & PPE supply prioritization, high dependency on imports, lack of diversification of supply sources, dependency on foreign factories around the world, sophisticated cyberattacks brought operational challenges to all supply chains beyond existing scenarios, established norms, procedures and processes. Cost of shipping a 40’container on China-USA routes hit increase of 370% in mid-August 2021, route Shanghai-Rotterdam, noted skyrocketing of prices up to 660%, year on year.
Beneficiaries from the exceptional market circumstances are the Shipping lines & fleet owners. Congestions, surge in transport calls, bottlenecks continue to drive up the rates. This can be seen in quarterly results of most significant market players. The world’s largest container shipping firm (MAERSK) has posted Q2/2021 results. Reported earnings before interest and tax came to approx. 4.4 BEUR, a 200% increase from the 1.5 BEUR, year on year. Noted revenue is up almost 60%.
Ocean transport demands continues to exceed global capacity, with no sign of slowing down. This reflects in unreliable and inflexible schedules, with pandemic risks driven labor and challenges at major ports.
The current situation in ocean freight has its cause also in market segmentation. Over last decade largest market players were heading into the monopolistic approach. Few years back we could account approx. 16 major global carriers. Today’s date 9 remained upon merges. Last 9 had been consolidated in three alliances that control 80% of the container shipping market. With this result every company in need for ocean freight has limited options as it comes to transport of the goods by sea freight.
Particularly for the European and US routes, firms are now booking containers almost for a month in advance, noting that increasing shipping demand brought container & handling equipment shortages. Rapid fluctuation on pricing should bring a closer supervision from logistics professionals, industrial organisations and market authorities.
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