Such a level of global demand growth matches perfectly the expected long-term global demand growth trend and is well-catered for in terms of available capacity. The problem is therefore not global demand. However, there is clearly an import demand boom specifically in North America where volumes are up 23% in 1 st half 2021 versus 1 st half 2019. This contributes to create severe capacity bottlenecks in the US. Capacity bottlenecks When bottlenecks appear this leads to delays in sailing schedules – which effectively removes capacity of both vessels and containers from the market. The latest data from SeaIntelligence shows that in June such delays globally removed 10% of all vessel capacity from the market – in line with the trend seen for most of 2021. Even without a demand boom, the removal of 10% of available capacity has led to a capacity shortage in the market. This capacity problem can only be brought back into the market by resolving the bottlenecks and bringing the delays down. Operational overviews from Korean carrier HMM shows that port congestion in major ports across the world in the beginning of August have gotten worse, not better. All else equal this will lead to more delays and hence the continued removal of effective capacity from the market in the near term. A tangible example can be seen outside the port of Los Angeles/Long Beach in California. In the beginning of 2021 congestion issued peaked with roughly 25 container vessels stuck in a queue waiting to berth for several months. In May to July this was gradually improving and at one point the queue went below 10 vessels. As of the second week of August the queue is now exceeding 30 vessels. This escalation in bottleneck problems has a multitude of reasons. One being that carriers have responded to the demand boom in North America by launching multiple new services with both small and big vessels. In itself this is positive news – it shows that carriers are indeed responding to the demand from the shippers and are increasing capacity. However, this has two additional side effects. One side effect is that the launch of additional capacity leads to a sharp increase in the amount of cargo the ports need to handle – and also a sharp increase in the demand for trucks, chassis, rail etc. on the hinterland part of the import. The hinterland capacity is not geared to handle such a surge and hence struggle in getting containers to and from the ports fast enough. This clogs up the ports, further delaying the vessels. The other side effect is seen in all other trades around the world. As there quite literally are no available ships to be had at all, the insertion of for example new Pacific services can only be done because vessels are removed from other regional trades. These regional trades subsequently experience capacity shortages and increases freight rates. This also pushes up charter rates for smaller vessels. These used to cost some 10-15.000 USD/day pre-pandemic but now goes for 120-150.000 USD/day for short term charters in these new services. This pushes up the underlying costs and again serves to push freight rates up in all trades.
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