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Surprise demand most likely cause of rocketing container rates

US containerised imports from Asia increased 19 per cent year on year to 9

18 March 2021 - 19:00
US containerised imports from Asia increased 19 per cent year on year to 9.7 million TEU from August 2020 through January 2021, causing many to believe surprise demand was most likely cause for rocketing rates, reports IHS Media.

'The carriers had to change gears very, very fast. In the first half of the year, there was really overcapacity, and a lot of effort was made to take tonnage out of the market that was being unused. The bookings simply weren't coming through, and a lot of those contracted volumes weren't there. We needed to quickly and rapidly reduce the number of loops we had and to suspend services and lay up tonnage,' he said, noting some ships were sailing 90 per cent empty,' said Ocean Network Express (ONE) CEO Jeremy Nixon.



'In July and August, we had to go very quickly the other way. By August, we had all of our ships back in production and were actually trying to take further ships out of the charter market,' said Mr Nixon.



Flexi-Van Leasing chassis provider CEO Ron Widdows said that carriers reacted to a dynamic that was global.



'The carriers have done a remarkable piece of work to react to having no cargo moving and assets all over the world sitting doing nothing, and no freight, to the second half of the year, when they had to find every single ship that could float and deploy it to handle this remarkable demand,' said Mr Widdows.



'We have a number of customers, traditional brick-and-mortar retail companies, that in the early days of the pandemic when they were concerned about demand in the US, their stores were closed, they completely cancelled orders, they left cargo sitting on the dock at origin, they completely shut down their supply chains,' said Mr Widdows.



Carriers have been criticised for neglecting to honour loading commitments made in contracts and for charging premiums.



DHL Global Forwarding's head of ocean freight Dominique von Orelli stated that opportunistic behavior is not sustainable in the long run.



'No one could really foresee what happened in the middle of last year with the sudden volume surge, so we shouldn't be blaming the carriers or anybody else for this. But what we have seen again and what shows very clearly is that you have to plan long term and you have to deliver against commitments, which means you need binding agreements on all sides,' said Mr von Orelli.


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