The freight rate has reached a record high, and the freight volume of trans Pacific trade routes is more than ever before. The prosperity of the consolidation market has made the new orders of global container ships (measured by transport capacity) more than double in less than eight months this year. However, shipping executives warned that the supply of container ships may remain tight in the next few years, given the soaring demand and the transformation of the fleet.
//New ship orders surge//
According to Hellenic Shipping News, there are currently 619 orders for container ships to be delivered in the future, 381 in 2021 alone, and the order capacity has reached 3.44200 TEU in such a short time.
(Photo source: Greek Shipping News)
Peter Sand, the chief shipping analyst of the Baltic International Shipping Association (BIMCO), said: "Currently, container ship orders have a transportation capacity of 5.3 million TEU, and it is planned to join the fleet in 2023. At the beginning of 2021, the order transportation capacity was only 2.5 million TEU. Since then, the order transportation capacity has increased by a record 3.3 million TEU, indicating that ship owners are investing heavily in new transportation capacity."
//Ships in short supply//
Despite the recent sharp increase in container ship orders, executives in the shipping industry believe that the surge in demand for container ship services and the complexity of reforming the fleet for environmental reasons mean that the supply of container ships may still be insufficient in the coming years.
Andi Case, CEO of Clarksons, the world's largest shipping broker, said that since 2017, the number of shipyards in the world has decreased by two-thirds to about 115. "We are far from oversupply of the fleet," he said
Soren Skou, CEO of Maersk, a container shipping giant, said on this month's financial report conference call: "The current high freight rate is caused by the shortage of supply and demand. There is simply not enough capacity."
In addition, there is an inherent bias that ships will never be delivered as scheduled in the order, so BIMCO always takes delayed delivery into account when predicting the actual delivery in a given year.
//Supply chain problems persist//
The supply chain problems caused by the epidemic have pushed the shipping cost to a historical high, and the shortage of ships has increased the possibility of continued high freight rates, which is not good news for retailers and consumers.
The Drewry World Container Index shows that as of August 26, the weighted average freight rate of a 40 foot container on major trans ocean routes rose by 2.1%, reaching a record high of US $9818.
In response to rising transportation costs and raw material prices, enterprises have announced price increases, including American toy manufacturer Hasbro. Deborah Thomas, the chief financial officer of Hasbro, said that the company expected that the shipping cost this year would be four times higher than last year on average.
In addition to the increase in commodity prices, consumers also need to be prepared for weeks of delay in shipping, so as not to return when the shopping season comes.
Bob Biesterfeld, CEO of C.H. Robinson, said: "The pressure on the global supply chain has not eased, and we do not expect it to improve in the short term." He said: "As we have been predicting for months, shoppers will see some shelves empty during the holidays. In addition, if you want to buy most gifts online, please place an order as soon as possible. Delivery time may take 4-6 weeks."
Many insiders predict that the problem of tight global supply chain may last until next year. Thierry Vanelslander, an economist in the field of transportation, said that as long as the COVID-19 epidemic was not controlled, sea freight would continue to be disrupted. Biesterfeld believes that the problems of port congestion and soaring freight costs may not ease until February 2022, after the Lunar New Year.