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Pandemic drives sea freight prices to record high

LONDON, July 4 — Container delivery prices have reached record highs some 18 months after the outbreak of the coronavirus pandemic which disrupted maritime logistics chains and drove demand sky-high.

“We are mainly operating out of vessels and of empty containers,” Alan Murphy, head of the consultancy Sea Intelligence, informed eNM.

“There’s been an enormous scarcity of empty containers, they’re within the improper place, they’re caught in ports and never in Asia prepared to be loaded.”

The Freightos Baltic Index, a benchmark for main delivery routes, has greater than tripled in a 12 months to almost US$7,000 (RM29,150) for a visit from China to the west coast of the United States.

A visit to Europe has exceeded US$10,000, in contrast with simply US$1,600 on the identical time final 12 months.

Murphy stated the unprecedented state of affairs compounded the troubles of the final 10 years, which he stated had been “actually dangerous for the delivery strains”.

Blighted by overcapacity within the sector, he stated the corporations “had been dropping cash each time they had been shifting a container”.

‘Unprecedented drop’

The Covid-19 pandemic, which initially introduced world delivery to a digital standstill, didn’t bode effectively for the business and led to “an unprecedented drop in demand”, stated Didier Rabattu, of Lombard Odier Investment Managers.

But this didn’t account for the traits amongst US and European customers who throughout lockdown stopped spending in eating places and theatres or occurring vacation and as an alternative used their cash to buy materials items — a lot of them imported from Asia.

“Imagine what number of televisions you should purchase in the event you don’t go snowboarding for per week with 4 individuals?” stated Paul Tourret, director of France’s Higher Institute of Maritime Economics (ISEMAR).

Disruptions to loading and unloading operations, from dockers falling sick and Covid restrictions to unforseen occasions just like the delivery backlog triggered the blockage of the Suez Canal in March, have solely exacerbated the pattern.

As a consequence, ship homeowners have by no means been in higher form.

The Marseille-based CMA CGM container and delivery firm for instance posted a internet revenue of greater than US$2 billion for the primary quarter of 2021 alone, 40 occasions greater than the earlier 12 months.

Its Danish competitor AP Moller-Maersk introduced a good greater internet revenue of US$2.7 billion for the primary three months of the 12 months — 13 occasions what it noticed final 12 months.

‘Reached a peak’

“It is true that ship homeowners are making some huge cash in the intervening time,” Tourret stated.

“But additionally it is a approach for them to renew their fleets and speed up their liquefied pure fuel (LNG) programmes,” he added.

CMA CGM positioned an order in April for 22 container ships, greater than half of that are LNG-powered.

Maritime transport is “one of many primary emitters of sulphur dioxide”, the French professional stated, including that though figures had been beneficial for every tonne transported, the sector however emitted ranges of CO2 “comparable to Germany”.

The value of container transport depends upon the extent of demand, but in addition on supply-side capability to meet it.

“Whether or not shipowners determine to wage a commerce conflict is a significant component,” Tourret stated.

“None of them has any curiosity in driving prices down. Their collective self-discipline immediately should be not to promote out,” he added.

The state of affairs might final, Tourret stated, pushed partially by the necessity to transport perishable items.

“If you’re carrying perishable items that might be price nothing in the event that they don’t transfer, how a lot are you ready to pay?” he requested.

Jean-Marc Lacave, the manager officer of the physique for France’s maritime service professionals, Armateurs de France, stated he didn’t anticipate issues to return to regular earlier than the primary quarter of 2022.

“I feel we’ve got reached a peak,” he stated. “If demand continues to rise, there’s a not insignificant threat that prices might rise once more, however we’re roughly on the high of the curve,” he added. — eNM

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