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Peter Su, Yang Ming’s chief financial officer, said today that he believes container shipping is so chaotic it is difficult to explain to shippers port omissions or skipped sailings.
Mr Su said that ships had to detour around the Cape of Good Hope due to the Red Sea situation. This has hindered the operations, as it has tightened up the availability of containers and ships.
“This is beyond the control of any shipping company.”
“The market is so chaotic that it’s difficult to explain skipped flights.” Arrivals in South-east Asia were delayed due to port congestion. For liner operators, omitting the ports is their last resort.
Alphaliner’s data indicates that 1.48m teu have been delivered out of the 2.2m teu anticipated. The demand for cargo has outstripped the supply with nearly all ships in operation.
Mr Su said, “It is estimated that the Red Sea Crisis will reduce supply by 15 to 20% compared to a capacity growth of around 10% this year. Every Asia-Europe line now needs at least two to four additional ships.
“The insufficient number of vessels has affected revenues from Asia-Europe service.” We must continue to keep an eye on geopolitics and inflation. Bookings for July have reached the same level as this month and the demand is higher than the same period last. Geopolitical tensions cannot be predicted, and the market’s prosperity must be assessed every month.
Mr Su said that the current increase in freight rates may be a temporary phenomenon, because there are “too many unknowns, since nobody can predict when Houthi attacks will end”.
Linerlytica analyst Tan Hua Joo said The Loadstar that despite talk of a possible truce between Israel and Hamas a market normalisation was not likely to happen in the near future.
He said: “The correction won’t happen until the ships return to Suez, and the supply shortage is resolved.” This could take months.
You can read more about the “feverish” container shipping industry here.
Check out this clip from Visy Global Logistics’ Peter Sundara Swamickannu on whether or not this is the beginning of a massive Q3