What are the factors contributing to the significant increase in international shipping freight rates?
What are the factors contributing to the significant increase in international shipping freight rates? Since 2020, the international shipping freight rates have been described perfectly as "rising steadily like sesame flowers blooming one after another". The pandemic, the Suez Canal incident, and the recent severe congestion at the ports in South China have made the snowball of international shipping freight rates grow even larger.
Next, Baoyun Network will elaborate for you on the factors that have driven the significant increase in international shipping freight rates.
1. Behind the continuous rise in shipping freight rates is the recovery of demand in major economies such as the United States and Europe after the pandemic, along with the "insufficient supply" of global shipping capacity.
According to the data, from May 2020 to the present, the global manufacturing PMI index reflecting the economic and trade conditions of the world has rebounded significantly from the low point of 39.6% to 56%. Since the second half of 2020, the global container shipping capacity has only rebounded from 2.6% to 4% year-on-year, completely failing to keep up with the pace of demand recovery.
2. The "insufficient supply" of global shipping capacity stems from the fact that the ships in operation are already operating at full capacity, while the newly added ships and capacity are severely insufficient.
Data shows that since the second half of 2020, with the significant expansion of container shipping demand, the idle rate of global container shipping capacity has dropped from the previous high of 11.4% to a historical low of 4.7%. The shortage of container shipping capacity has directly led to the dismantling rate of global container ships dropping to around 0%. At the same time, the newly added ships and capacity are very limited when the shipping capacity is close to being "fully utilized".
Data from Clarksons shows that in 2020, the actual additional capacity of global container shipping was 860,000 standard containers, equivalent to only 3.6% of the existing capacity, and simply cannot meet the demand of container shipping.
3. The "labor shortage" in multiple ports in the United States and Europe, as well as the significant reduction in the number of seafarers due to the repeated outbreaks of the pandemic, have further hindered the release of global shipping capacity and pushed up freight rates.
In addition to the shortage of ships, the multiple core ports in the United States and Europe have experienced a significant decline in operational efficiency due to the "labor shortage". At the same time, the significant rebound of the epidemic in India and the Philippines has led several countries to refuse the entry of ships carrying Indian and Filipino seafarers, and the total number of seafarers from these two countries accounts for more than one-third of the global total.
The "labor shortage" at ports and the reduction in the number of Indian and Filipino seafarers have further exacerbated the supply-demand contradiction in the shipping industry and pushed up freight rates.