This meant that by the time Ever Given got stuck in the Suez Canal, the market was already at a point where there was insufficient capacity available. The waiting times caused by the blockage effectively removed even more capacity, both vessels and containers, from the market as well as served to further delay the movement of empty containers. When the canal re-opened this led to worsening congestion problems in European ports as a large surge of cargo arrived within a shorter timespan than normal. Then on top of that we now have an unfolding situation in South China which will cause even larger problems than the Suez incident in the weeks and months ahead. How badly is the market out of alignment? In terms of actual numbers, how bad is the current situation? For shippers in the market this is felt through rate levels, availability of capacity and the delays in the services provided. Rates are of course different to some degree for all shippers. However, almost all trades globally are at record levels and in most cases far above any levels ever seen in container shipping. As an example, the World Container Index (WCI) shows Asia-Europe spot rates at 10,500 USD/FFE versus a level typically between 1-2,000 USD/FFE from 2015-2020. Similarly, the WCI shows the rate in the opposite direction from Europe to Asia at 1700 USD/FFE versus a pre-pandemic level below 600 USD/FFE. Even these rates are to some degree misleading, as spot shippers in the current market often find they need to pay up to several thousand USD on top of these rates in order to get equipment as well as actual space on the vessels. The delays have never been worse on any of the services globally. The latest data for April shows 61% of all vessels globally arrive late. When they do arrive, they are on average 6 days late. This is driven by severe bottlenecks in many ports around the world, in turn delaying the vessels with no immediate prospect for getting back on time. When vessels are being this severely delayed, it effectively removes sailing capacity from the market. Analysis of the actual delays shows that in April 9% of all global vessel capacity was effectively removed from the market due to these delays. Comparatively, this would be the same as taking all ultra-large container vessels of 18,000 TEU and above and removing them from the global market. The bottom-line of the situation is: there is quite literally not enough capacity in the market right now. Why will it get worse in the coming weeks? The one major reason why this will get worse in the coming weeks is that Yantian in South China is impacted by COVID-19 restrictions in the region, spurred on by local new infections. The partial closure of the terminal in Yantian has now lasted for more than 2 weeks. It can be estimated that means 25,000 TEU cannot be handled every single day. For comparison 55,000 TEU per day were impacted by the Suez closure. Hence more cargo is already now impacted than what was seen with Suez.
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