Premium Services, Surcharges, Spot Rates, Congestion... What's next in shipping?
For the shipping industry, 2020 and 2021 have been full of delays coupled with container shortages resulting in surcharges and spot rates that are higher than ever before. On top of that, the past two years have been full of unprecedented order numbers resulting in record-breaking port congestion and now premium services are being offered to help deal with the influx.
In time full of both lows and highs, most container carriers are focused on two things. First, getting through the day-to-day. This includes making it to port, unloading ships in a timely manner, then reloading and returning for the next shipment. Second, and possibly the most important, trying to anticipate what is ahead. This includes predicting and then planning for future shipping trends. That said, in this article we will look at premium services, surcharges, spot rates, congestion, and discussing the possibilities of what's next in shipping?
Global Shipping Demand Forecast
Recently, several shipping carrier have been ordering new vessels in anticipation for sales that are growing faster than capacity.
In an article by news company Trans.iNFO, it is found that “analysts expect the Asia and Pacific region to witness the fastest growth among all freight markets. The forecast growth will come to a CAGR of 5.4% in 2020-2024.” Similarly, “the North American shipping market is expected to grow at a CAGR of 5.4% in 2020-2024.”
However, it is important to note that, even with the vessel orders underway, the ships will not be ready until 2023-2024. Which means that, in the coming times, carriers will have to deal with growth in another way, coupled with high rates.
Future Shipping Rates and Reliability
Unfortunately, as consumers continue to shop and ports still struggle to handle bottlenecks, shipping rates will continue to skyrocket.
The Wall Street Journal in early July 2021 explains, “prices to ship containers from Asia to the U.S. and Europe are rising at a historic pace as cargo owners bid up rates in a search for ocean transportation capacity that shipping industry executives expect to remain tight for the rest of the year.
The average price worldwide to ship a 40-foot container has more than quadrupled from a year ago, according to a global pricing index by London-based Drewry Shipping Consultants Ltd. The measure has surged 53.5% since the first week of May.”
In this light, without more vessels and continued growth, the shipping industry has a long road ahead, especially when it comes to managing distributions across the supply chain. Delays and port reliability are sure to be a leading concern in the coming months. That being said, many shippers are turning to airfreight to stock their empty shelves. As ocean freight rates continue to skyrocket, it makes sense for shippers to take advantage of the air cargo availability and the much faster transit times.
Want to stay on top of your shipments? Whether it is an air or ocean shipment, let the experts at ClearFreight help you with your logistics needs. We have helped thousands of customers smoothly navigate these trying times and look forward to helping you.