It is no secret that ocean and container shipping markets have had countless issues over the last year. An already fragile surge in ocean rates and reduced container capacity did not pair well with the recent influx in U.S. imports, which has resulted in a chaotic global market.
How Did We Get Here?
The shortage in container shipping resources, paired with high demand, did not happen overnight. There are quite a few contributing factors for the current market that have been building since early 2020. A few of the major causes are:
- High U.S. import volume and consumer demand
- COVID-related terminal shutdowns in China
- Ocean carriers accepting unusually high volumes of freight, anticipating additional shutdowns internationally
- High percentages of containers moving to later sailings due to a lack of space
- High ocean rates across the globe
- Heavy congestion at U.S. ports
- The Ever Given ship getting stuck in the Suez Canal
- Overall pandemic panic and uncertainty
While this list is not exhaustive, it does provide the majority of contributing factors for the volatile container shipping market being felt across the globe. So, what can be expected for the remainder of the year?
What’s Next in Q4 and Beyond?
As 2021 comes to an end, shippers are hoping for relief in the fourth quarter and into 2022. Industry experts are projecting the following takeaways for the end of 2021 and beginning of next year:
- Congestion at U.S. ports is expected to continue at least through the end of 2021; some congestion may be alleviated with the recent appointment of John Porcari as port envoy to the U.S. Supply Chain Disruptions Task Force
- Shipping capacity will remain tight, resulting in the continuous rise of freight rates
- Cargo demand will continue to rise through the holiday season; manufacturing levels will remain elevated due to low warehouse levels
- High demand for cargo will continue to exceed shipping capacity
- Consumers may begin holiday ordering earlier this year, meaning demand may be spread throughout all of Q4 more evenly than in past years
- Increased need for expedited and time-sensitive truck and rail deliveries are to be expected due to ocean shipping delays
- Container shipping building prices will continue to be higher than past averages due to supply shortages and high demand
Projections in the volatile container shipping market are never certain, but you should expect more of the same in Q4 with the possibility of some slight relief in port congestion and demand levels.