As more and more shippers turn to air to meet their transportation needs, the sharp drop in capacity is sending air cargo rates through the roof. While the airfreight market operates at peak levels months ahead of schedule, container shipping’s vessel orderbook-to-fleet ratio is finally on the rise again after steadily declining since 2010. The ratio (which hit the lowest point of the century at the end of Q3 last year) now stands at 17.6%, according to Clarkson Research Services.
We’ll probably see that figure go up even more as large ocean liners like Cosco, Hapag-Lloyd, and HMM continue to place orders in the coming months. Despite this growth, the industry approach to ordering new vessels won’t be nearly as aggressive as it was in the past because many of these carriers have the scale they need, which effectively minimizes the risks associated with having way too much capacity.
Consumer demand on the other hand is just as aggressive as ever. The surging volumes West Coast ports have been struggling to overcome are now heavily raining down on rail, intermodal, and trucking — leaving U.S. shippers with three times the volume at three times the price compared to last year’s levels. And the fact that manufacturers are purchasing way more material than they need in order to ensure they have enough on hand to keep up with the excessive spikes in demand is definitely not helping matters either.
This buying frenzy has resulted in drastic increases in supply chain shortages, transportation bottlenecks, and freight prices, causing many to worry about the impending threat of economic inflation. In other news, a container ship about 50 miles west of the coast of Monterey, California recently reported an engine fire to U.S. Coast Guard Sector San Francisco watchstanders at 4:54 a.m. last Friday. Thankfully, there have been no further reports of injuries, pollution, or cargo losses at this point in time.
To learn more about these leading industry issues, check out the following article highlights:
