Asia containers market is expected to face a perfect storm of peak demand, equipment shortfall and port congestion in the second half of 2021.
The equipment shortfall, which began in June last year, may not only continue till the end of the year but is also likely to spill over into 2022. The demand is expected to remain high, particularly due to strong exports to the US and Europe, sources said.
“Traditionally, the demand peaks during July and August as retailers rush in to build inventories before the Chinese Golden Week Holiday in October. As the carriers void a lot of sailings during October, the latter half of the month goes in clearing the backlog and in November we again see a spike in export orders as the Christmas and New Year Holiday get closer,” Dave Li, manager, T.H.I Logistics, Chongqing branch said.
A major part of demand could be attributed to shift in spending to products from services in the wake of coronavirus-related lockdowns.
Even though the economy in the US is gradually opening up, the demand for physical goods is still very strong, according to Peter Sundara, vice president, Global Ocean Product-Global Freight Management, LF Logistics.
“I think we are already at peak … The outlook is very strong, at least until Q1 next year. Having said that, with aftermath of Suez Canal blockage and now with Yantian port congestion, carriers were voiding sailings to get back on the schedule. We believe that at the end of July, the schedule could be back on track but this depends on how soon port congestion eases,” Sundara said.
The companies were trying to augment their inventory, but combined with record sales and congestion, they were unable to move fast enough, a US-based inland logistics manager said.
“With force majeures appearing one after another (now Shenzhen), the only prediction one can make is continued chaos meaning freight rates will keep climbing north,” Nick Coverdale, founder, Agreefreight said.
Yantian port in Shenzhen reported congestion, with sources saying that the impact may be larger than anticipated and may leave lingering effects on other key ports across Asia.
The operations at Yantian port came to a halt in the last week of May after coronavirus cases resurfaced among the port workers. Amid the stringent preventive measures, major carriers have omitted more than 100 ships calls at the port.
“Yantian port can now handle 500 boxes a day compared to nearly 30,000 boxes before. This is a big issue because Yantian is a major market in China. The vessels can’t call Shekou or Nansha because these ports don’t carry the capacity to handle such volumes, so, carriers are looking at having more calls in Hong Kong or additional calls in Shanghai or even have an additional call in Xiamen or some other ports,” a logistics provider based in Hong Kong said.