The industry is currently experiencing the highest rate levels EVER, matched by the worst service levels from shipping lines with very little regard for the impact that this is serving on not only the forwarders and their clients, but we are now seeing the ripple effects with increased prices on the high street and online, coupled with evident shortages of products that everyone normally takes for granted.
Many businesses that rely on importing their products have or are considering halting their import operations as rates remain at the highest recorded level. Shipping lines seem short-sighted and blasé about the impact their pricing policies are causing for so many industries. They are damaging the very companies that have provided their lifeblood for so many years.
The Industry is screaming out for stability, with a more sustainable rate where shipping lines can make money, but not, at the same time, price their clients out of an already competitive market. Shipping lines are not acknowledging and have never acknowledged this and prefer to operate in a “famine or feast” mindset and they are most certainly enjoying their largest feast ever!
There are many rumours surrounding the reasons for rate increases, lack of availability of containers positioned in the Far East, many blame the pandemic others suggesting that this has been manufactured by the very people who are imposing the unrealistic and unsustainable rates. The truth may be somewhere in between the three. But the question is, how much longer can this be expected to continue?
After discussions with shipping lines, it is evident that the UK market is just not attractive enough for them. In today’s market, comparing the UK share of the capacity on inbound vessels, from January 2020 to May 2021, UK capacity has been reduced by 40%, creating a demand for decreasing space. The reasons for this is that mainland Europe has much more export business. For every four containers being imported into the UK, the shipping lines have one export container, so you can see there is a huge imbalance of trade.
It was indicated during conversations that there is no light at end of the tunnel for UK importers. Carriers indicate the trend of all-time high rates will go not only well into the second quarter in 2022, but potentially into early 2023 and that only when shipping lines take delivery of huge 23,000 TEU vessels, will capacity beat demand. Then it is believed that the rates will “flip” to much lower levels, but this is way off and not what importers or UK forwarders want to hear.