Global Demand for Ocean Shipping Holds Firm Despite Pandemic
It seems implausible, given the ongoing pandemic and lockdown restrictions of 2020, but figures show that that the global demand for ocean shipping on East/West lanes will be virtually on par with the respective figures for 2019.
Based on the currently scheduled blank sailings from carriers, demand for the third quarter of the year is projected to be down by only 0.1% compared to the same period for last year.
The year-over-year figures for July are likely to show a decline, but the year-over-year figures in August and September will represent growth. Bearing in mind the continued effect of the coronavirus epidemic on the global effect, this might come as a surprise. However, it’s worth remembering that the lockdown has actually created an increased demand for many kinds of consumer products. For example, as more and more employees work from home rather than the office, the demand for home office supplies and furniture has risen. Because of these changing patterns, imports are likely to boosted throughout the autumn months.
It’s a picture that remains slightly unclear overall. For example, Søren Skou, Maersk CEO, admits that their visibility is not all it could be. Upcoming demand from shippers lacks clarity too but the overall rise in spending on goods seems to be borne out of the fact that spending on services has been greatly reduced as an option. Carriers have now added capacity back into the market, after the disappointing figures that were posted earlier in the year.
By the worst month for ocean volumes was April. Over the month the volumes were down by 20%. However, since April a sequential improvement has been seen. Indeed, the rates were pushed up considerably during August. During the month, capacity had to catch up with demand. The rates from China to the Pacific West Coast of North America were up by almost 47% year-on-year.
Of course, the overall turnaround in the second half of 2020 will still need to be dramatic if the sector is to offset the damage that the economy has suffered since March. Back in July, the Port of Los Angeles issued a gloomy forecast, saying that its volume for 2020 was going to be the lowest it has been since the Great Recession.
Other forecasts suggest that October is likely to be the busiest period of the peak season. 1.7million TEUs are expected to be handled during the month. This is a year-on-year drop of almost 10%.
Ports have been experiencing a stabilization in volumes recently, and many forecasters believe that it is unlikely that the peaks seen during August will be repeated over the coming months. The busiest month has more than likely been and gone, meaning that everything else seen during the peak season is likely to be something of a disappointment in comparison.
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