A lack of shipping capacity and containers and bottlenecks at major seaports are currently impeding international shipments of all sorts of goods. Exporters of beer, malt, other food, sporting goods, lawn and garden equipment, and many things more are complaining about rising container freights and delays in shipments around the world.
This has not only led to longer delivery times and thus to bottlenecks in the supply of various goods, but in some cases even threatens continuous production when stocks are short.
“At the moment some breweries have problems to get enough malt to ensure their continuous production,” says Volker Riechers, managing director of Erfurter Malzwerke, one of the leading exporters of malt from Germany. The company that runs an 80.000 t malt house in the harbor of Hamburg has seen shortages in the supply of containers already for a couple of months. “Sometimes shipping lines inform us on short notice that there is a delay of one or two weeks for a planned shipment. This not only poses great challenges for us, because we have to constantly adjust our shipment schedule but it is particularly problematic for our customers who are firmly counting on the delivery. Up to now we could always manage to solve the problems but it is becoming increasingly difficult,” says Mr. Riechers.
The reasons for the shortages are easy to name. The resurgent global demand in anticipation of a waning corona pandemic is expanding production capacity of all sorts of goods and driving freight rates up, Maersk CEO Soren Skou told CNBC. After a 15% dip in Maersk’s volumes in the second quarter of 2020, the sharp rebound toward the end of the year, particularly in the U.S. and Europe, saw global trade overcompensate the loss and reverse it to a 5% year-on-year increase.
Maersk, the world’s largest container shipping firm had removed capacity after the slump in the second quarter 2020 because “large retailers […] stopped buying stuff in Asia in the second quarter of 2020 and well into the summer,” Mr. Skou said. When the first vaccines against the coronavirus were announced and a normalization of the situation became foreseeable consumers started spending more and a large restocking started.
"Since the third quarter, we've seen an unparalleled rise in demand for container transport," also Nils Haupt of container shipping company Hapag Lloyd told DW recently. Hapag Lloyd is according to own information global leader in container shipping, specializing in reefer cargo, dangerous goods, and special cargo projects. Mr. Haupt reported that things took a turn in August when demand for container transportation picked up considerably, exceeding supply capacities.
Clients desperately looking for shipping capacity are also willing to pay considerably higher prices. The cost of shipping a 40-foot container from Asia to northern Europe has increased from about USD 2,000 in November to more than USD 9,000, the Financial Times reported.
The price distortions on the market have led to strange occurrences. “For the carriers, it is obviously more attractive to have revenue, if you will, in the container in both directions, but clearly, I have also heard stories about carriers deciding to turn around empty containers and ship it back to Asia, rather than wait an extra week or two to fill it up with exports from the U.S.,” Maersk boss Mr. Skou said.
Cosco Shipping Holdings, the largest integrated shipping company in China and the second-largest in the world, reported last week its 2020 results with the highest profit in 12 years. Cosco reported that “most shipping lines sharply reduced their routes in the first half of 2020 as demand evaporated due to COVID 19, leaving the amount of idle capacity at a record high at the end of May. Prices begin to rise at that time, prompting companies to gradually put capacity back online starting in the third quarter. The spiking shipping rates even forced governments in China and the U.S. to step in,” Cosco reported.
Mediterranean Shipping Company (MSC), the number two container shipping company in Europe and a world leader in refrigerated transport solutions, announced last week new record-breaking results for 2020. With 1.9m reefer container transported MSC surpassed its previous 2019 mark of 1.8m units. "2020 was another successful year for MSC's reefer services as we battled the Covid pandemic to continue delivering essential food and medicine,” the company said in a statement. A 40% increase in global demand for fresh fruit as consumers were looking for immunity-boosting vitamin C-rich foods helped boosting the results.
Experts believe that in a not-too-distant future, the business will go back to normal. “Once the backlog of goods has been dealt with and life is back to normal, the transport of goods will also return to normal,” expects an observer of the industry. “Latest at the end of this summer, the logistics situation will reverse. And in the long run, many companies will even look to source more locally thus reducing the need for international freight.”
However, until then it could be tough going.