The global shipping industry is facing ongoing volatility.
The demand and supply of maritime transport have changed significantly, affecting the freight rates and port operations. Companies such as ourselves involved in the shipping of yarns and other technical based products follow the trends carefully.
The recovery of the global shipping movements since the pandemic has been uneven and fragile. Other risks and uncertainties, such as the US-China trade tensions, sanctions, piracy attacks and wars have added further pressures.
The IMO also implemented a global Sulphur cap on marine fuels since January 2020, which, along with targets to go ‘greener’ has increased the costs and complexity for the shipowners and operators.
Global Shipping Prices
The global shipping prices have been affected by the fluctuations in the demand and supply of maritime transport, as well as by the changes in the fuel costs and regulations. The freight rates for container shipping have been increasing again in recent months, along with and in part caused by the longer routes being used due to water shortages in the Panama canal and in the case of Europe having to route ships away from the shorter Red Sea Suez canal route. We face an anxious wait each month to know what the freight rates will be for goods that we have already ordered. The freight can only be fixed when the container is booked and usually for goods shipped by TEU (20’ containers) prices can be in the region of at least $4,000 up to $7,000 plus the UK/Europe port and delivery costs are taken into account to get goods from Asia into our warehouse ready to support our customers with in time deliveries. Partial, LCL deliveries can cost considerably more.
There are also extensive infrastructure challenges. One example is Singapore, a leading maritime hub, with a strategic location, a comprehensive port infrastructure and services, and a vibrant maritime cluster. Singapore handles about one-seventh of the world’s container transshipment throughput. Singapore is developing the Tuas Mega Port, which will consolidate all its port operations in a single location, and increase its annual handling capacity from 50 million to 65 million TEUs by 2040. Many challenges are ahead with increased vessel sizes and ever more complex digital and automated systems that will need to be implemented not just for Singapore but for all ports.
Global Shipping Delivery Times
As already alluded to timescales to receive materials are long. In the good old days goods from Taiwan, China and Korea would have 4 weeks on the water. Now it is more like 7 weeks as being the norm so this creates planning issues for customers, particularly those that have to work hand to mouth with sales forecasts.
Future of Global Shipping
So the question for us is whether we will continue to see shipping costs continue to rise month by month as they have been doing since the last few months of 2023.
We suspect (but don’t really know) shipping prices will remain high and may even increase further in 2024. There is still a global recovery underway and provided this continues it will put strains on the system at the same time that shipping companies have to invest to achieve carbon reduction targets. Maybe things might improve slightly in 2025 but will probably be improving from a price at the end of this year that is much higher than todays rate.
As usual we don’t have a crystal ball but luckily we have stocks in the warehouse purchased across various months that enable us to try and mitigate things for our customers. There is no doubt that there is a general slowdown in the textile sector as we write this but this is also the holiday period and we hope that we will see the market bounce back after August and transportation costs to be manageable.
