With continued volatility in the seafreight market, what does the landscape look like in 2022?
Miles O’Donnell National Sales & Procurement Manager (Seafreight) at Europa Air & Sea provides his thoughts and assessment of the current seafreight market.
“The last two years have caused major headaches across all modes of transport, from the global pandemic, Brexit, shipping incidents, driver shortage, as well as major weather events, it’s been a period like never before.In particular, the seafreight sector has been hit from all sides. Freight rates have battered European retailers, brands and manufacturers and some are saying it could take more than two years to stablise, but is that the case?
This is usually the season, not of festive goodwill and cheer but when shipping lines talk about agreeing fixed rate deals with customers to plan for future business. However, this year there is a new trend emerging with some shipping lines wanting to fix multi-year deals.
But with no new vessel capacity on the horizon should customers agree a fixed rate or play the market? Compared with last March’s low prices, freight rates from China to the US and Europe have risen by 300 per cent. In many instances these new deals are five or six times higher than pre-pandemic levels, but with continued uncertainly, should you fix now?
The additional challenge is that new deals are not being offered to everyone as the lines continue their stance that 2022 will follow much the same trends with port congestion, void sailings, regional lock downs in the Far East and equipment displacement challenges.
But looking much further ahead we know that there will, be additional capacity in the market in 2023, with new vessels expected but again these aren’t expected to enter the market until March and then follow a slow phase plan for the 18 months that follow.
There are also moves by some in the market to take the current container shortage and port delay in their own hands. It has been widely reported that brands such as Amazon are taking control of their own shipping with their own cargo containers in China.
Conversely, it was also reported in the autumn that high demand and spiraling energy costs are forcing some Chinese factories to reduce their working hours, adding further problems to the supply chain. But reduced output could mean reduced volumes shipped and reduced demand.
The challenge for all customers is to weigh up potential changes in the sector and then decide whether fixing offers the best long-term benefit.”
Europa Air & Sea ensures that every customer is provided with the most suitable options for their supply chain, depending on their unique requirements. The division is focusing on minimising the impact of the pandemic to its customers by offering continued high levels of service in all sectors.
More about Europa Worldwide Group
Europa was recently featured in The Sunday Times Top Track 250 for the third time and employs over 1100 across the UK and Hong Kong.