Container shipping prices around the world are now at their highest point in history. This increase is a direct result of the Covid-19 pandemic. The pandemic disrupted maritime logistics chains all over the world. It also greatly elevated demand for shipments across the planet.
According to the Freightos Baltic Index, the cost of sending a shipment from China to the west coast of the United States is now almost US$7,000 (RM29,100). The price of a similar shipment to Europe currently stands at around US$10,000 (RM41,600). Just one year ago, the price of such a shipment was US$1,600 (RM6,700).
Commenting on the effects of these price increases, CEO of Copenhagen-based consultancy Sea-Intelligence said, “We are basically running out of vessels and of empty containers. There’s been a massive shortage of empty containers (and) they are in the wrong (places. They) are stuck in ports and not in Asia ready to be loaded.”
Murphy added that the high prices compounded the struggles faced by the shipping industry over the past decade. He said that the past 10 years had already seen many shipping lines struggle mightily. Murphy went on to mention that whenever any firm moved a container, it would be likely to suffer a financial loss. The primary cause of such losses is overcapacity.
The Covid-19 pandemic spurred increased demand for shipments all over the world. Lockdowns prevented millions of people from spending money on travels. This in turn caused them to spend their newfound disposable income on material products. Many of these products come from parts of the world far from where the consumers live.
Due to this sudden increase in demand, ship owners around the world made large sums of money during the pandemic. Marseille-based container and shipping company CMA CGM posted a net profit in excess of US$2 billion (RM8.3 billion) during the first quarter of 2021. This figure was around 40 times more than its profit over the same period last year.
A. P. Møller – Mærsk, a major shipping company which operates out of Copenhagen, made approximately US$2.7 billion (RM11.2 billion) during the first three months of 2021. This statistic shows that the company exceeded its profit level of the same period a year ago by a factor of 13.
Jean-Marc Lacave, the managing director of maritime service professional body Armateurs de France, said that the situation would be unlikely to normalize until the first quarter of 2022 at the earliest.
“I think we have reached a peak,” he said. “If demand continues to rise, there is a not insignificant risk that prices could rise again, but we are more or less at the top of the curve.”
5th July 2021 16:22
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