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Unprecedented Market Conditions

August 20, 2021

Sea freight rates remain at an all-time high, with prices 360% higher than the same time last year.

The World Container Freight Index continues to track well above usual rates, and significantly higher than even peak rates of 2020.

Moving product around the world is increasingly challenging in these unprecedented market conditions. We take a look at some of the reasons why.

Current market conditions have been propelled by several compounding factors.

Initially the impacts of COVID-19 were seen on disruptions to manufacturing and exporting out of China specifically. But these initial interruptions have been exacerbated by consumption economies and growing import volumes.

Currently, new order growth is exceeding the capacity of containers for transport available, seeing a backlog of manufacturing jobs rising at a record pace.

As a result, the average supplier delivery time has lengthened globally to the greatest degree in 23 years.

And the ongoing imbalance of supply and demand since the pandemic has been made worse by an unprecedented number of companies building safety stocks to protect their customer offering.

Freight containers being stacked by a crane
Cargo ships sitting on the sea

These conditions are currently being paired with increased health and safety concerns associated with the COVID-19 Delta variant.

This has further restricted capacity and efficiency.

Port closures or restrictions have caused major delays and congestion, with the Asia – Oceania shipping line reliability sitting as low as 4% at some times, and averaging only 20%. This means not only is it hard to access freight containers, but even when space is secured – shipments are late, delayed or even cancelled.

This limited vessel availability paired with unprecedented demand for space has seen container spot rate price increases in excess of 500% higher than the previous year.

Detpak continues to assist our customers in navigating these impacts and continues to prioritise supply and service in these unprecedented market conditions.

For more information or an overview of freight issues, read our update on freight conditions.

Or, back to Latest News.

 

References

https://www.drewry.co.uk/supply-chain-advisors/supply-chain-expertise/world-container-index-assessed-by-drewry

http://www.mondialefreight.com/info/news/

https://www.bifa.org/news

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