Global Shipping Crisis: Will Companies Change the Transportation of Goods?

Global Shipping Crisis: Will Companies Change the Transportation of Goods?

2022-11-25 11:52:52

1. Various factors increase the world sea freight rates


In recent months, there have been many unfortunate events in the shipping world: A huge ship ran aground in the Suez Canal, disrupting sailing for several days and increasing the cost of shipping worldwide. There are also a large number of ships waiting to be unloaded or loaded near the port. In addition, many transportation companies have suspended operations due to the new crown virus.


The British magazine The Economist reports that all of the above factors have allowed the global shipping industry to experience an unprecedented crisis in 2021, resulting in the average shipping price of a 40-foot container exceeding $10,000, which is four times the price of last year. 


The report pointed out that trains, planes and trucks are still solutions with limited efficiency, especially when transporting goods over long distances around the world, and the transportation of goods by sea accounts for a quarter of all goods shipped globally. Companies often find themselves faced with a choice—either pay exorbitant prices and absorb delays at ports, or not ship these cargoes at all. Over the past few years, the ocean shipping industry has continued to supply the global market and store shelves are often filled with goods from the other side of the world, but the industry has not received much attention because ocean freight quotes are cheap and very smooth.


But at the moment, with delays increasing and ocean freight quotes rising, ocean freight is losing its reputation as a reliable and convenient shipping option for all companies. To make matters worse, most experts are not giving optimistic forecasts. They are not expecting improvements in speed and cost in shipping next year, and the current deteriorating situation could lead to a reorganization of global trade in different ways.


2. Will the world sea freight rates return to normal?


Some experts believe that the global maritime transport situation will not return to normal until February, which tends to be a less stressful season for ports. Even if demand from U.S. consumers returns to normal levels, the companies will refill warehouses they have completely emptied over the past period. There are also signs of an uptick in demand for goods in continental Europe, which is a sign that the world's shipping crisis will continue, and ocean freight quote are still on the rise.


Amid the shock of these crises and the uncertain outlook, the only certainty is that the maritime industry has made unprecedented profits from this crisis. As a result, these companies tend to sign contracts to buy more ships, but it can take 2 to 3 years for these orders to be digested, especially as the number of global shipyards is lower than in previous years.


It is important to note that the shipping industry accounts for 2.7% of global carbon emissions and is under enormous pressure to transition to clean energy, or at least reduce the industry's pollution of the air and oceans. The shipping companies are expected to face strict restrictions and procedures from the government, which will take effect from 2023.

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