If shippers and logistics companies hope that the ultra-high shipping container prices will fall in the New Year, then they may be disappointed.
Rolf Habben Jansen, CEO of shipping company Hapag-Lloyd, revealed at a press conference that global logistics giants and container liner companies expect that the chaotic market, lack of berths, and container shortages, etc., will still be available by 2021. Will last for a while.
In addition, Tim Scharwath, CEO of freight forwarding giant DHL Global Freight Forwarding, also attended the meeting. What the two CEOs have in common is that they agree that 2020 is characterized by great unpredictability, such as promising customers whether their goods will reach their destinations on time, which is very unpredictable.
As time goes by and the year is coming to an end, shippers have to pay more and more freight to ship the goods. This development is largely due to the sharp increase in demand month by month since July. For example, it is not uncommon to have to pay US$5,000 for shipping containers from Hong Kong to New York.
▍It will not stabilize until the second half of 2021
The two executives agreed that after the outbreak of the new crown pneumonia this spring, the very special environment has caused a historic imbalance between supply and demand. They also believe that the shipping market will not stabilize for the time being.
Scharwath said: "As for shipping, I think we must enter the second half of 2021 before we see the market stabilize again. The first quarter will definitely be affected, and so will the second quarter."
"We will have to wait and see what happens, because everything is difficult to predict. As a large company, we usually make plans for 3 to 5 years. Now, we are making plans for 3 months."
Inadequate ship capacity and insufficient containers have serious consequences for the industry’s supply chain. In addition to customer dishonesty and record high freight rates, a recent survey conducted by Sea-Intelligence shows that only half of the ships can reach their destinations on time .
▍Shipping companies strengthen management and control
Mainly affected by the new crown epidemic, container shipping companies’ performance in the second quarter was weak, but their profits have soared to record levels since the summer. However, the quality of service is lacking, and container shipping companies have been stating for months that these conditions are beyond the scope that they can change.
On the one hand, they do not have more ships to deploy, on the other hand, they cannot redistribute the containers to the required ports. In addition to other reasons, customers do not return the goods.
Currently, Asia in particular is suffering from a shortage of containers because many containers are in the United States. According to a Bloomberg report, it may also be because of port congestion that these containers cannot be unloaded at US ports. This is the case with 20 container ships currently near the Port of Long Beach.
Therefore, at the beginning of December, CMA CGM, Maersk and ONE had to refuse to leave the booking outside of Asia, the reason is very simple, because there is no extra space on board.
Hapag-Lloyd, led by Habben Jansen, also benefited from the increase in freight rates in recent months. Therefore, the shipping company has twice raised its full-year 2020 profit forecast, and the company currently expects its operating results to exceed US$2.7 billion.
However, the CEO said that it is usually because of an oversupply of ships, and 10 years after the industry has lost billions of dollars, it is time for container shipping companies to start making money.
▍Strong performance in the second quarter of next year
Until recently, shipping companies and container manufacturers also predicted that the current shortage of containers will be resolved after the Chinese New Year in February, which will restore the market to a more normal state. But Habben Jansen no longer believes this prediction is correct.
"This year’s development is beyond everyone’s expectations. Because of the introduction of economic stimulus measures, people still have money on hand, and most of the money has been spent on container cargo. Many signs indicate that the strong market we see after the Spring Festival has passed. It will appear and will continue into the second quarter."
Habben Jansen pointed out that the current market congestion will take some time to resolve.
