With the state of the shipping industry riddled with congestion, delays, and not to mention rising freight rates, the chaos in the shipping and logistics industry is something never seen in the world in modern world. With different countries going into lockdown and increase in restrictions and COVID-19 safety regulations, economies have been affected greatly with every aspect of the shipping industry being affected. It’s safe to say the world, and Australia alike were not prepared for the effects of COVID-19 and how it has faced the last year.
Whilst demand for shipping dipped drastically with the onset of COVID-19, carriers had to resort to blank sailings. Experts say that it was mostly due to lockdowns in China that contributed to this along with over 400 blank sailings. However, with China’s lockdowns easing, there was increased demand which led to port congestions in various parts of the world.
Port congestions at major transshipment hubs led to many delays that affected the shipping industry. This led to carriers having to increase their rates due to port congestion and delays, and thereafter leading to a global container shortage as there were not enough containers returning upon deliveries. In terms of the global container shortage, it was caused with the demand for container but the unavailability to do so. Whilst container demand rose higher, overall demand kept dipping with exports dropping and thus containers turnover or exchange reducing drastically. This is also one of the causes of imbalanced container availability in Australia, with empty container storage yards being needed to stack them until exports improve.
Whilst trading was affected, there were other issues within the shipping industry due to the pandemic, which included vessels being quarantined due to outbreaks, not to mention area-specific or country-wide lockdowns, and operations being slower due to limited personnel availability.
With constrained capacity and not to mention rising freight prices was a result of the demand hike and blank sailings. With capacity issues, many cargo shipments faced delays that were not only expensive but also disrupted the supply chain. This led to more rolled on cargo, which is a term to signify cargo that could not be loaded onto its intended vessel due to lack of capacity. In the mix of things, not only did air cargo capacity also dip but so did passenger air travel which affected cargo being shipped in the belly of passenger aircrafts.
However, whilst the state of the shipping industry sounds bleak, the growth of air cargo freight in February 2021 is something to look forward to.