When the container market situation began to normalize and even ocean freight rates began to drop, the conflict between Russia and Ukraine and the new blockades in China are beginning to complicate the situation again.
The sector is once again in a state of uncertainty that could shoot again prices and cause congestion at portsaccording to what emerges from an analysis carried out by the senior manager of container research at the consulting firm Drewry, Simón Heaney.
“We don’t think this is the end of the bull run for container freight rates, but the market is extremely volatile and things can change very quickly. All these events add to the uncertainty in the container market and have expanded the long list of risks that carriers face”, explains the expert in an article published on March 31.
Heaney notes that the development of the tariffs will depend on how long this situation in China lasts and how the economic impact of the war between Russia and Ukraine plays out.
“Based on market intelligence and customer surveys, we now we believe that market normalization will not occur before 2023. China’s adherence to its zero-tolerance public health response to Covid is one of the main reasons why we have forecast supply chain recovery to occur later than expected.
The expert reports that high-volume ports around the world, on average, were very congested during 2021 and that this year not only are they not improving, but they seem to be getting worse.
Heaney is concerned that more medium-volume ports are congested and that the situation in low-volume ports is also deteriorating.
“Recent events have not fundamentally changed our outlook for trade and the timing of any container supply chain disruption. It looks like more of the same for the container market in 2022 with more disruptions, extreme freight rates and carrier profitability,” he says.
Other experts
Like Heaney, other Drewry specialists consider that the industry is once again experiencing turbulent times.
The consultant’s Director of Maritime Research, Navin Kumar, explains in another article that due to the current situation, the supply of vessels in some regions will be limited, which, together with a high insurance premium, will push up freight rates. .
“In the short term, the demand for crude oil and chemical tankers will increase as Russian crude importers turn to distant suppliers, while sunflower oil importers will switch to soybean oil supplied by countries located further away than Ukraine and Ukraine. Russia”, foresees the expert.
Kumar indicates that while the war could reduce charter rates for dry bulk ships in the short term by hampering grain and coal exports, in the medium to long term it will have a negative impact on rates even in the sectors of crude oil and chemical products.
The expert anticipates that the war will hamper the grain and coal trade.
Kumar reports that freight rates were weak for much of February 2022, but increased towards the end of the month due to concerns about possible disruption to Russian oil supply.
“The conflict has impacted the container sector in two ways: it has resulted in increased oil prices and it has led many countries to impose sanctions on Russia to isolate the latter. Rising bunker prices are likely to put further upward pressure on freight rates in a market that is already historically high,” says Kumar in his article published on March 17.
Other experts also agree that the ongoing conflict has substantially increased uncertainty in the global container shipping market in the medium and long term.
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