Lockdown lifting in Shanghai could result in further price rises and "panic shipping" © Photo by  Photo by David McNew/Getty Images
Lockdown lifting in Shanghai could result in further price rises and "panic shipping" © Photo by Photo by David McNew/Getty Images

Freight forwarders warn of 'chaos' as shipping enters peak season

31 May 2022

Russia’s war in Ukraine has “ torn apart the expectations of recovery in supply chains”, as experts warn shipping disruption will last “well into” 2023. 

Four in 10 (41%) freight forwarders expect the peak shipping season this summer to be “more chaotic” than last year, in a survey by data firm Container xChange. 

Global shipping has been thrown into chaos following Covid-19, lockdowns at key Chinese ports, and Russia’s war on Ukraine.
Christian Roeloffs, co-founder and CEO at Container xChange told Supply Management container prices have “skyrocketed” by up to 10-fold on certain routes in the past two years “owing to one disruption after the other”.
He said: “Covid-induced lockdowns in China have slowed the supply chain worldwide and the Russia-Ukraine war has torn apart the expectations of recovery of the supply chain, which has been grappling to keep up to the pressures of implications resulting from these and many more disruptions. 
“By the way the first half of 2022 has gone, these disruptions will be faced by the industry well into the year 2023.”
In response to the disruptions, 56% of survey respondents said they had been growing networks to mitigate supply challenges since the pandemic, while 38% said they had agreed to long-term contracts, and a further 25% had followed a multi-tender strategy.
“Surprisingly”, however, 62.5% said they were still relying on the spot market or doing nothing specific to ensure shipments reach clients.
Lockdowns at Chinese ports were voted the biggest concern by freight forwarders, followed by container availability, and depots being full.
58% of respondents said lockdowns at ports in Shanghai – one of the world’s busiest ports – meant it has been “hard to produce/ship as many products as planned”.
Roeloffs said the lifting of lockdowns in Shanghai could result in “panic shipping” following a build of filled containers destined for the West, as “everyone wants to be on time for the peak season and wants to make sure that the cargo reaches the West on time”. 
If borne out, this could result in further price rises as companies scramble to transport products. 
Roeloffs said: “It's almost like in a traffic jam. Some people stepped on the brakes really heavily and this will lead to a significant bulk up in demand for freight services, which will essentially be unleashed once the factories reopen.”
He said the carriers at Chinese ports currently do not have enough equipment following the lockdowns as it had not been transported to the ports during this period.
However, a “sea” of containers being shipped out of China, just as the world enters its busiest period for global shipping freight, could result in further congestion at ports in Los Angeles and Long Beach in the US.
 
“This will continue pushing the volatility in the market and the congestion situation on the Transpacific will also not significantly improve because it's almost like a start-stop situation,” Roeloffs added. 
“It will come back worse than it was because the way you remove the traffic jam is not by stopping something violently and then hitting the accelerator again. It's making sure the traffic flows at a certain speed.”

Global shipping has been thrown into chaos following Covid-19, lockdowns at key Chinese ports, and Russia’s war on Ukraine.

Christian Roeloffs, co-founder and CEO at Container xChange told Supply Management container prices have “skyrocketed” by up to 10-fold on certain routes in the past two years “owing to one disruption after the other”.

He said: “Covid-induced lockdowns in China have slowed the supply chain worldwide and the Russia-Ukraine war has torn apart the expectations of recovery of the supply chain, which has been grappling to keep up to the pressures of implications resulting from these and many more disruptions. 

“By the way the first half of 2022 has gone, these disruptions will be faced by the industry well into the year 2023.”

In response to the disruptions, 56% of survey respondents said they had been growing networks to mitigate supply challenges since the pandemic, while 38% said they had agreed to long-term contracts, and a further 25% had followed a multi-tender strategy.

“Surprisingly”, however, 62.5% said they were still relying on the spot market or doing nothing specific to ensure shipments reach clients.

Lockdowns at Chinese ports were voted the biggest concern by freight forwarders, followed by container availability, and depots being full.

58% of respondents said lockdowns at ports in Shanghai – one of the world’s busiest ports – meant it has been “hard to produce/ship as many products as planned”.

Roeloffs said the lifting of lockdowns in Shanghai could result in “panic shipping” following a build of filled containers destined for the West, as “everyone wants to be on time for the peak season and wants to make sure that the cargo reaches the West on time”. 

If borne out, this could result in further price rises as companies scramble to transport products. 

Roeloffs said: “It's almost like in a traffic jam. Some people stepped on the brakes really heavily and this will lead to a significant bulk up in demand for freight services, which will essentially be unleashed once the factories reopen.”

He said the carriers at Chinese ports currently do not have enough equipment following the lockdowns as it had not been transported to the ports during this period.

However, a “sea” of containers being shipped out of China, just as the world enters its busiest period for global shipping freight, could result in further congestion at ports in Los Angeles and Long Beach in the US. 

“This will continue pushing the volatility in the market and the congestion situation on the Transpacific will also not significantly improve because it's almost like a start-stop situation,” Roeloffs added. 

“It will come back worse than it was because the way you remove the traffic jam is not by stopping something violently and then hitting the accelerator again. It's making sure the traffic flows at a certain speed.”

 

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