Less container circulation than in pandemic - Redlines Group

Less container circulation than in pandemic

Less container circulation than in pandemic
After two years of limited capacity, the scenario changes. 

Tha landscape for the maritime industry is changing, with freight rates falling and container flow to the US declining by about 20% compared to the previous month. 

According to the current context, there is a collapse in maritime transport spot rates, after their peak due to the pandemic caused by COVID-19, to which Ryan Petersen, CEO of Flexport, points out its real importance, since, for transport container shipping, 60-70% is agreed in annual contracts and 30-4% in the spot market. However, this changed with the pandemic, where there was a further rise in spot rates over contracts. 

It is experiencing a transition from capacity limited by the pandemic to the recession, in this regard, he noted that when capacity is limited, what matters the most is the relationship between shipping lines and shippers/owners of the cargo: if anything when it comes to profitable clients, for how long it has been and the consistency of this relationship, “the fact of committing cargo and not canceling begins to be more important”. He added that “we went through a really long period from 2015 to 2019-2020, at the beginning of the pandemic, when there was an excess capacity in shipping. And then we had two years of extremely limited capacity and it feels like we are right in the middle of a major recession, meaning there is less container shipping than before the pandemic”. 

In terms of automatization, the efforts made by US port operators in the face of a future repetition of load spikes, he indicated that “i cannot say that i have seen material changes in the infrastructure of our ports to allow them to handle an increase in capacity if that happens again, the appointment systems have not improved neither has the technology to pick up containers, to take trucks aout and out of the port”. Petersen points out that in the port industry, he recognized himself as an outsider, but “the terminals USWC charges about $600 to unload the container and it takes 30 seconds for a crane to do it, so that looks like a pretty high tax, compared to the rest of the world, in China it’s about $100 and a part of that is because they have lower labor costs, but a lot of that is because they have more automatization”. 

January 9, 2023
For further information, visit the link: https://www.mundomaritimo.cl/noticias/actualmente-se-transportan-menos-contenedores-que-antes-de-la-pandemia

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