MOSCOW (Pakistan Point News / Sputnik - 20th August, 2021) The global container shipping market is struggling with some of its worst volatility in decades, as disruptions linked to the pandemic continue to rattle the entire supply chain, experts told Sputnik on Thursday.
Container shipping is the backbone of international trade, with ocean shipping accounting for over 90% of traded goods, according to the Organization for Economic Cooperation and Development.
"It's never been more volatile. The global container market is close to a breaking point if it's not already broken," Simon Heaney, a senior manager in charge of container research at London-based Drewry Shipping Consultants, told Sputnik.
The industry hit a logjam last year when canceled and delayed shipments coincided with a boom in online shopping, driving shipping rates upwards, while a large number of containers was rusting away for months in Southeast Asian terminals.
Heaney suggested that port delays were just the tip of the iceberg, with disruptions inland having a negative effect on every step further down the supply chain.
"The reason to have in mind in terms of delays at ports etc, not just the visible, not just what we can see, that's the most obvious example of the supply chain bottlenecks. But it is occurring inland as well, there are issues in the warehouses, there are issues with inland transport, trucking, rail," he added.
China's decision to partially shut its biggest cargo ports in Ningbo and previously at Yantian in Shenzhen over coronavirus concerns, and the jamming of the Suez Canal in Marchz only compounded problems for the market.
"We have the same sort of increase in freight rate [as when Shenzhen was closed], although it's difficult to unpick all the various factors that add to the freight rate at the moment. The situation in Ningbo is not helpful, it is completely unpredictable," Heaney said.
Ningbo has been closed for a week and is projected to reopen by the end of August. The Yantian terminal was closed for three weeks in June. An obviously disconcerting factor for shippers is that both terminals were shut down after reporting a single case of coronavirus.
"The fact that China seems to have a zero-tolerance policy in terms of locking down these facilities is obviously a worry because it was just one case and they shut down an entire terminal. If that's repeated elsewhere, then clearly that's a huge risk," he said.
The danger is that importers and exporters will increase current orders in the hope of getting ahead of any future disruptions.
"That will exacerbate the problem again because you have more demand coming in and that's really the problem that demand is so surged and ports can't cope," Heaney explained.
Jason Chiang, an associate director of Ocean Shipping Consultants, predicted that a halt in services at Ningbo port would mostly affect shipments to Southeast Asia and Europe. He told Sputnik that market volatility would continue in the near future.
"As long as some of the components of the chain are not operating you will keep getting disruptions and this will result in delays. The way to see the market normalize is hopefully for these disruptions will stop," he said.