Hopes of a return to normality across global supply chains after Chinese New Year in February have been brought into question, with the suggestion that it may be Q4 before the situation eases.
According to a report in The Loadstar, two major analysts – Drewry and MSI – have stated that they don’t expect the supply chain crisis and elevated freight rates to change significantly before the end of next year.
In its latest Container Forecaster report, Drewry suggested that supply chain turmoil will last longer than anticipated, with a senior researcher claiming: “We had expected more progress at this stage. The deteriorating situation makes us think the problem is much deeper-seated than feared, with the pandemic bringing forward latent crises within certain sectors.”
The report concluded that the consensus view from conversations with a selection of industry professionals is that the end of 2022 is “a more likely timeframe” for recovery. This aligns with what Toy World was told by several key people within the shipping community several months ago.
Elsewhere, Maritime Strategies International analyst Daniel Richards is quoted as saying that “freight rates are more likely to move sideways rather than dramatically downward next year, since the task of reducing the level of congestion and backlogs across the system will take time, and the prevailing level of container demand will remain healthy.”
Drewry has upgraded its outlook for average global freight rates for this year. Continued high spot rates, together with what it perceives as a catch-up in long-term contract rates, has led Drewry to upgrade its forecast for combined spot and contract rates for 2021 to a year-on-year increase of 126%.
The impact of this is likely to see record profitability for ocean carriers yet again in the third quarter. Drewry says it now expects the liner industry to clock up an eye-watering ebitda of $150bn this year, up from its previous forecast of $100bn. “With regulators breathing down their necks looking for evidence of unethical activity, shipping lines are on the defensive, and recent moves by some to cease further spot rate increases need to be viewed through the prism of a PR war,” suggests Drewry.