Ocean Freight and Logistics
Q2 2022 Market Update
SUMMARY: Container shipping costs are higher than ever and will stay high for the foreseeable future as importers continue to battle for space in the face of record demand for consumer goods from Asia. Covid resurgence in China disrupted productivity 511oss the supply chain in March. Next potential disruption on- deck … West Coast Longshore Union contract expiration and negotiation.
COVID RECURRENCES CONTINUE TO UPSET SUPPLY CHAIN ▪ A record wave of Covid 19 variant outbreaks being referred to as “Stealth Omicron” hit Shenzhen, Shanghai and Hong Kong in March, leading to lockdowns, work-from-home orders, restrictions on truck driver movement, and extensive disruption of manufacturing, ground transport, port operations, and ocean sailings. AsteelFlash, Associated Press ▪ Freight forwarders in Hong Kong estimate domestic truck fleet capacity in China has been cut by at least 70% due to Covid outbreaks, further delaying and disrupting product flow from factories to outbound ports. Splash247.com
Demand for goods will continue to outpace supply until 2023, keeping pressure on ocean container shipping. Drewry Maritime
Freightos Baltic Index of Ocean vessel container load prices rose 2% to $16,403 in mid-March for routes from China/ East Asia to US West Coast, 196% higher than the same time in 2021. Freightos
OCEAN FREIGHT COSTS CLIMB HIGHER, SET NEW BAR ▪ Container berth cost from Asia to the West Coast of North America in late February 2022 was 179% higher than the same time the prior year. In March, the YoY rate was 196% higher. Freightos ▪ Ocean carriers manage capacity more to their advantage now, taking vessel capacity out of their fleet systems on short notice, helping to keep prices they charge for berths high by reducing the price-dampening impact of new / additional ships coming on-stream. DHL
WEST COAST PORT LABOR CONTRACT EXPIRATION LOOMS ▪ Current labor contracts at US West Coast ports expire July 1. Supply chain disruption has routinely occurred during past negotiation seasons and industry experts warn that the current Covid / Supply Chain crises era leaves little existing buffer capacity for other ports in Canada, Mexico or the East Coast of the United States to absorb diversions from US West Coast ports. Lars Jensen, Vespucci Maritime
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