Capacity restoration is key to crisis recovery, says Global Shippers Forum

Global Shippers Forum, the global trade body that advises shippers and cargo owners in the conduct of international trade, has conducted a study indicating that shippers have found alternative ways of getting their goods to market, while available container shipping services have reached their maximum point and service patterns have changed to serve congested routes.

In particular, global trade has continued to grow during the third quarter but with deployed container shipping capacity fully utilised. Hence, additional growth was being moved by air freight and rail services between China and Europe, as well as own-charter vessels or services provided by non-liner carriers.

Commenting on the findings of the latest Container Shipping Market Quarterly Review, published by the Global Shippers Forum and MDS Transmodal, James Hookham, GSF Director, said that the review shows the extent to which shippers sought out alternatives, as shipping lines priced themselves out of reach and narrowed the cost difference with offerings from other modes.

"A measurable share is also accounted for by vessels chartered by shippers for their own goods, or by other non-liner shipping carriers," pointed out Hookham.

Source: MDS Transmodal, World Cargo Database November 2021 & Container Trades Statistics

The chart shows the growth in world trade since the second quarter of 2020, as recorded by landed imported volumes (gold line) and the slightly declining volumes carried by scheduled ocean liner services since that time (blue line).

"The Great Shipping Crisis of 2021 has taken many casualties as shippers trapped between record rates and very poor service levels struggled to fulfill delivery deadlines for imports destined for the holiday sales season," stated Hookham who went on to add that shippers will be watching anxiously to see how quickly these conditions abate in 2022 and whether the use of these alternative services will continue to grow.

Shipping lines are attributing the cause of the crisis to port congestion and inland logistics bottlenecks. But, according to Hookham, this means that, as these conditions ease post-peak season and output dips in Chinese New Year, container shipping capacity levels should increase to match shippers’ demand more closely.

"This recovery in capacity could accelerate if consumers switch spending to services rather than goods, and interest rate hikes and higher energy costs take their toll on discretionary spending," explained Hookham.

New analysis in the Container Shipping Market Quarterly Review reveals the extent to which shipping lines have adjusted global service patterns with many more 'shuttle services' being introduced at the expense of services making multiple port calls in different regions.

This reduces the number of countries with direct connections to their export markets and requires more frequent transfer of loads between services at hub ports, such as Singapore and Colombo, according to the review.

Mike Garratt, Chairman of MDS Transmodal, stated, "Our review this quarter has examined how alliance members have expanded their role in developing consortia and therefore market shares and the way in which they have addressed operational challenges in modifying route structures."

This reduction in services linking multiple world regions has been accompanied by a decline in the number of countries that are directly connected, according to Garratt.

"Given the dramatic growth in freight rates and declining service performance, it is not surprising to see trade growing more quickly than container volumes on the established lines, as shippers have found other transport solutions," he noted.

Source: MDS Transmodal, Containership Databank November 2021

The chart shows the increase in the number of scheduled liner services serving just two regions (gold line) and the decline in services making multiple port calls in more than two regions (blue line). In the meantime, the number of countries benefitting from direct connections has been decreased since 2019, according to the review.

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