High Container Freight Rates Will Continue Until 2024, Shippers Need To Be Prepared To Face Difficulties

Shipping analyst Lars Jensen of Vespucci Maritime, a shipping analysis agency, believes that the container shipping market is moving towards a "new normal" with high freight rates, and that the cyclical freight rate rebound in this wave of the market may continue for several years. However, both shippers and logistics companies may face a relatively difficult period.

As Xinde Maritime Network recently introduced in the article "Container Freight Rates Continue to Rise, Shippers Fighting for Space", due to the impact of the epidemic, the global container supply chain has fallen into a bottleneck, container freight rates are high, and space shortages have caused shippers and shippers to have to In order to get the space, you are fighting for me.

 

But Lars Jensen said that shippers and logistics companies will also face a series of difficult years. The situation before 2024 will be more beneficial to the consolidator companies, because high freight rates may become a stable state.

 

At the webinar held by DSV Panalpina last Tuesday, Jensen made the above prediction. Jensen also said that so far, 2021 is a record year for container routes, but it is also an expensive year for shippers.

 

He pointed out that the "new normal" in the container market is mainly the result of the congestion of the Suez Canal and the coronavirus pandemic.

 

"Now, it will take 4-6 months for us to have a real chance to return to normal. But this requires the world to behave normally, but the reality is not the case," Jensen said. He added, "The unusually high (freight) demand is positive. Consolidation companies are in the process of absorbing excess capacity."

 

Because the container shipping market was in a long-term weak state before the epidemic, new container ship orders were at an extremely low level, which became an important reason for the bottleneck of the container shipping industry's supply chain when demand soared.

 

Jensen emphasized that under the current circumstances, the number of ships planning to enter the market is very small, but the demand has been soaring. Although the world’s major container shipping companies have ordered a large number of new ships since the second half of last year, shipbuilding requires certain events. These are expected to meet the growing demand and the delivery time of the ordered ships will need to be scheduled after 2024. .

 

This also means that the container industry will face a cyclical improvement, which will benefit container liner companies, but for its customers, costs will inevitably rise.

 

This trend can also be felt in logistics companies such as DSV. Anders Oldenborg, Director of Maritime Products of DSV Air & Sea, will take the initiative in December last year, and January and February this year. The container shipping market is described as "crazy, (situation) that we have never experienced before".

 

Anders Oldenborg also said that at the beginning of March, we saw some hope of market improvement. "Unfortunately, a ship blocked the Suez Canal and once again had a disastrous effect on the consolidation market."

 

He said: “Because of the lack of capacity, everything is useless. There are not enough containers to meet the demand we are seeing now. He added that as a result, DSV has begun to consider chartering to cope with the current market pressure.

 

Oldenborg said: "We have no intention of operating container shipping, but at the same time, when we encounter challenges like now, we feel it is necessary to look at the available alternatives."

 

In fact, according to Xinde Maritime Network, DSV has leased a 1800 TEU ship and some containers, and plans to open a one-off route from China to Northern Europe in early June.

 

Lars Jensen commented: "This should be seen as a clear sign of how much pressure the market is under in terms of lack of available capacity."

 

DSV also recently released its quarterly financial report. The company's CEO Bjørn Andersen emphasized that the current situation of high container freight but poor service quality is an "unfortunate continuous crit" for shippers. "From what we have seen in the market, it is not unimaginable that this unusual situation will continue for the rest of this year. Then let's see what happens."