With reports of blockbuster Q1 earnings, incredibly strong shipping demand, sustained spikes in freight costs, the L.A. cargo ship logjam, a looming post-Suez box shortage, and a stand-off between the Suez Canal Authority (SCA) and the Ever Given’s owner, it’s time to buckle up for week 15’s freight updates. Up first we have early reports of record-breaking monthly operating revenues far exceeding analyst expectations for carriers in ocean shipping.
According to Freightwaves, “the first quarter is shaping up to be much better than Q4 2020. For most container-shipping companies, it could be the best quarter in their history.” Hapag-Lloyd AG’s CEO Rolf Habben Jansen further supported this statement by adding “last week and this week we’ve still seen very strong bookings. So, I don’t see any signs around the corner that demand is falling off a cliff.” As carriers continue to profit, shippers are consequently seeing contract rates on popular lanes jump up by 25-50 percent YoY.
While we typically see softer spot rates for this time of year, stimulus checks, soaring demand, a lack of labor/capacity, and increased port congestion are changing that by creating some major headaches for many companies. Just take a look at the Ports of Los Angeles and Long Beach where “an average of 30 container ships a day have been stuck outside just waiting to deliver their goods” based on WSJ.com’s video evidence. With a backlog of orders choking up logistics operations across the globe, a lot of shipping professionals are working overtime to prevent as many delivery delays as possible.
And the Suez Canal incident is the disruption that just keeps on giving — especially in terms of equipment shortages. According to JOC.com, “with ship delays in Europe of up to two weeks as a result of the six-day Suez Canal closure and subsequent congestion as vessels arrive at hub ports in close succession, carriers have warned that repositioning containers will be severely affected.”
Not only did this event severely tighten China’s box supply, but it also instigated a battle over insurance compensation for the varying parties involved. The SCA reportedly asked for “$1B in compensation to cover the costs of freeing the vessel and the estimated $100M loss of transit fees,” yet many European cargo owners still remain in the dark about what they will have to pay or when their cargo will even be available.
Check out the following article highlights to read more information about this week’s top stories in international shipping:
