If we instead compare May 2021 to May 2019, we find that demand has grown just 1%. Think about it the following way: Assume the pandemic never happened. The global demand situation right now is one where the global market has grown 0.5% per year since 2019. This level of demand growth is clearly not a global demand boom – instead it is close to stagnation. And it is even a slow-down compared to the first 4 months of 2021 where the same calculation shows a demand growth of 3% per year since 2019. To many participants in the market this sounds odd – after all the market is under more pressure than ever before. Looking at the FBX spot rate index it can be seen that during May the Asia-North Europe freight rate index increased 22% and the return trip from North Europe to Asia saw rates increase 13%. In the Pacific Asia to US East Coast went up 19% and on the Atlantic we saw North Europe to US East Coast go up by 21%. We are therefore in a global market situation where demand is factually not booming, but the rates are increasing sharply. The regional view When we look at the CTS data from a more regional perspective it becomes clear that the imports into North America are indeed seeing a genuine boom. Volumes in May 2021 are up 19% compared to May 2019. This is indeed a strong increase and can be termed a demand boom. The first 4 months of 2021 had seen similar strong growth at 24%. But the other regions around the world have not seen such a demand boom. European imports in May 2021 are basically at 0% growth in May 2021 versus May 2019 – and this was also the case for April. Even worse for the region covering the Indian subcontinent and the Middle East where import demand in May 2021 is down 15%. This further increases the seeming contradiction between demand growth and freight rate developments. Spot rates in the Asia-Europe trade have grown slightly more than spot rates from Asia to North America – despite the fact that the demand boom is solely happening in the US and Europe was stagnating. The implications for the current crisis The obvious conclusion from the data is that the current crisis is not principally demand driven. Although there is some added nuance to be added here. The demand boom in the US, which started in August 2020, was one of the factors leading to severe congestion problems in North America. It was not the only factor but is was one of the factors. And the continuing demand boom makes it difficult to resolve the persistent congestion problems in North America. The main reason for the continuing problems is the reduction in capacity due to bottleneck problems. There is a shortage of both vessel capacity and equipment capacity as the ships and containers are being used for much longer time than normally due to waiting times. We are still at a point where effectively 10% of the global container vessel fleet is unavailable due to delays. This leads to two important observations for the market conditions going forward:
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