THE global container market is vulnerable to periodic rate spikes, says consultancy Vespucci Maritime CEO Lars Jensen, reports London's S&P Global Platts.
Mr Jensen reckons the shipping industry is entering a period of volatility that will extend long after the current peak shipping season.
Bottlenecks causing severe congestion throughout the supply chain in North America will eventually be reduced, but that will likely happen in no less than six months from now and more likely in the second half of 2022, Mr Jensen told the recent South Carolina International Trade Convention.
He feared that even that easing may bring about a period where ship capacity trapped by congestion is released to load cargoes in Asia, only to begin bunching up again at import destinations driving rates higher.
Only when ordered ships materialise in any number, perhaps in 2023, will a semblance of the old normal be assured, Mr Jensen said.
'We can very easily predict a 2022 where volatility is the name of the game,' he said. 'You are likely to see extreme swings, especially on the spot rates.
'We've been used to an industry that was rapidly growing and also an industry that always had an enormous excess of capacity,' he said, adding, 'going forward we will also have excess capacity, but the gap between what we use and the absolute maximum is systemically going to be smaller than what we have been used to.'
This will make risk management in contracts more important going forward, Mr Jensen added. Shippers and carriers will both need to take more consideration what level of volumes they want to put into mutually committed contracts and how much exposure they want in the volatile, but flexible, spot market.
'We are always only one or two Covid cases away from a major Chinese port shutting down, and that will be hanging over our heads for months to come,' Mr Jensen said. 'We have seen some decline in transpacific rates, but it can always get worse as long as demand remains greater than supply.'
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Mr Jensen reckons the shipping industry is entering a period of volatility that will extend long after the current peak shipping season.
Bottlenecks causing severe congestion throughout the supply chain in North America will eventually be reduced, but that will likely happen in no less than six months from now and more likely in the second half of 2022, Mr Jensen told the recent South Carolina International Trade Convention.
He feared that even that easing may bring about a period where ship capacity trapped by congestion is released to load cargoes in Asia, only to begin bunching up again at import destinations driving rates higher.
Only when ordered ships materialise in any number, perhaps in 2023, will a semblance of the old normal be assured, Mr Jensen said.
'We can very easily predict a 2022 where volatility is the name of the game,' he said. 'You are likely to see extreme swings, especially on the spot rates.
'We've been used to an industry that was rapidly growing and also an industry that always had an enormous excess of capacity,' he said, adding, 'going forward we will also have excess capacity, but the gap between what we use and the absolute maximum is systemically going to be smaller than what we have been used to.'
This will make risk management in contracts more important going forward, Mr Jensen added. Shippers and carriers will both need to take more consideration what level of volumes they want to put into mutually committed contracts and how much exposure they want in the volatile, but flexible, spot market.
'We are always only one or two Covid cases away from a major Chinese port shutting down, and that will be hanging over our heads for months to come,' Mr Jensen said. 'We have seen some decline in transpacific rates, but it can always get worse as long as demand remains greater than supply.'
SeaNews Turkey
