Will Things Get Better in the Spring?

Will Things Get Better in the Spring?

February 15th, 2021

With no letup in sight for the COVID-fueled cargo boom, large ocean container lines are raking in the profits, while shippers struggle to manage the overwhelming demand surge.

It’s interesting to look at the breakdown of revenue and costs for a carrier like Maersk (see chart). And, based on the Maersk Q4 2020 key performance indicators, the carrier has successfully kept operating costs under control through all the market volatility of the past 12 months. According to Freightwaves, “Maersk reported ocean revenues of $8.26 billion for Q4 2020, up 15.5% compared to Q4 2019. Revenue growth was driven by a 3.2% increase in volume, but primarily, by a 17.7% spike in freight rates.” 

This marks yet another record quarter for the carrier, and if market conditions continue to follow the current trends, the industry giant expects to end the first quarter of 2021 on an even better note. Despite all of the present uncertainty, Maersk’s CFO Patrick Jany believes spot rates and container volumes should start to ease up in Q2 2021 — hopefully alleviating some of the intense port congestion and container shortages we’ve been experiencing.

But even with that optimism, shipping delays persist and even some Christmas deliveries still have not been made.

As everyone impatiently waits for contract season to arrive, many are working on their strategies for upcoming carrier contract negotiations in an attempt to address the significant supply chain stressors causing chaos at ports everywhere. One crucial move shippers should look out for, especially those involved in Trans-Pacific trade, is the efforts carriers plan on making to reduce contracted free time. 

This could mean shippers will have to make some serious adjustments to cut down on the time it takes to return containers, or this could mean that shippers will have to accept higher per diem charges, depending on how negotiations shake out ultimately. As companies prepare to negotiate terms to optimize equipment flow and enforce preventive measures, many industry leaders are also fighting to mitigate the pandemic-driven dockworker shortage by pleading with U.S. regulators for better access to vaccines. Without that critical classification of “front-line worker,” some cargo terminals may have to shut down operations temporarily at the rate that employees are getting sick right now.

To learn more about these issues and other key events going on in the international shipping industry, including electronic BOL’s, an air cargo update, and news about Vietnam’s market-resilience against the pandemic, check out the following highlights:

Container giant Maersk sees no letup yet in COVID-fueled cargo boom

For container lines, it just keeps getting better and better. Demand is hitting new highs with every passing quarter.

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Viewpoint: Container congestion may now impact Easter

Christmas isn’t over; some packages still not delivered due to shipping snarl.

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Trans-Pacific carriers aim to curb free time in annual contracts (sub. may be required)

Following a year in which extended possession of containers by many US importers, ocean carriers are signaling they will be specifically taking aim at reducing contracted free time in 2021–22 contracts.

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Where Has All The Ocean Capacity Gone And How Will We Get It Back?

Look out over the waters surrounding the ports of Los Angeles and Long Beach, which combined for a throughput of more than 17.3 million TEUs in 2020, and the cargo capacity problem is obvious.

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U.S. Dockworkers May Get Better Vaccine Access, Easing Port Risk

Dockworkers at the busiest U.S. gateway for trade with Asia may soon have better access to coronavirus vaccines.

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Electronic bill of lading – are you and your country ready for it..?? – Part 2

Many believe that the electronic bill of lading will be a game changer in the shipping industry with its faster, efficient transactions, reduction in costs with greater security and less risk.

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Air cargo market more volatile as hopes fade for return of bellyholds

Hopes for a recovery in bellyhold airfreight capacity to relieve the tight lift situation are fading as passenger traffic suffers setbacks from the Covid-19 pandemic.

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Vietnam grew faster than China last year and UBS says its economy still has ‘huge potential’

Vietnam was one of Asia’s top-performing economies in 2020 and among the few countries that managed to record growth last year despite the coronavirus pandemic.

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