The volatile shipping market brought on by the COVID-19 pandemic might finally be headed in the right direction; industry experts foresee a return to less outrageous rates and a reduction of capacity bottlenecks by mid-2021.
The Final Months of Turmoil
After the pandemic set in at the beginning of 2020, shipping companies saw drastic dips in both demand for shipped goods and the capacity to ship those remaining. Steamship lines had shortages in shipping containers, equipment, and workers while simultaneously being hit with a myriad of workplace restrictions due to the virus.
However, towards the end of 2020, global demand began to pick back up, putting significant stress on the logistics industry trying to keep pace. The sharp rebound stems from a combination of increased consumer spending as well as increased demand from larger companies, many of which are commencing restocking which was previously halted from their suppliers in Asia in mid-2020.
As demand returns, many container carriers are still contending with reduced capacity, resulting in freight rate increases of up to 300% as demand overshoots supply. Ports are experiencing delays and bottlenecks severe enough that reports have emerged indicating that carriers are rejecting US exports in favor of sending empty containers back to China to be filled with more profitable imports.
Smoother Sailing Ahead
Moving through the first quarter of 2021, signs are emerging that the logistics industry is recuperating, and exorbitant rates will soon peak. Carrier companies are beginning to order more containers while ports are working to get their workers vaccinated to overcome the bottlenecks and pandemic restrictions of last year.
Already, shares in large carriers such as Maersk are slumping up to 10% as freight rates show signs of peaking. Although rates will likely continue to rise during the remainder of the first quarter, they should level out near the middle of the year. With this end in sight, the industry can rest assured that returning to “normal” is only a matter of some adaptation along with a bit of patience.
Although signs may be pointed to a brighter future for the logistics industry, there are still port congestions, sky-rocketing rates, and unprecedented demand issues to deal with right now. Having a reliable logistics partner like Clearfreight can make managing your supply chain easier, allowing you to focus on managing your core business. Contact a ClearFreight team member today to hear about our customized logistics solutions designed for your supply chain.