Unpredictability and volatility remain the order of the day, according to shipping consultancy Drewry in its latest quarterly container market outlook.
The container logistics industry continues to face exceptional challenges, with demand still very low yet highly volatile, putting strong pressure on businesses, regardless of geography.
According to Simon Heaney, senior manager of container research, Drewry’s baseline forecast for worldwide port handling is an estimated 7.3% decrease, the worst performance since the world trade collapse in 2009.
“The base forecast has the second quarter as the bottom of the market, with global throughput for the period predicted to have crashed at around 16%. Our assumption is that activity will improve in the second half of the year as lockdowns are lifted and stimulus packages kick in, but the quarterly year-on-year growth rate will remain negative until at least the beginning of next year.”
He said as no one was in control of the virus; it was dictating things and so there was no certainty about what was to come.
“Our confidence levels for all our forecasts remain fairly low as there are still so many unanswered questions. The forecasts are also impacted by a longer or shorter outbreak as well as new outbreaks that could occur.”
The demand forecast, said Heaney, drew directly from economic forecasts. At the moment the consensus was for a global recovery next year.
While some ocean-borne volumes and some sailings have returned, the outlook for trade and for the global shipping network are still very uncertain and risky.
Heaney said normalisation of capacity would be very gradual - and with that a more stable environment for freight rates. “The industry is still facing big challenges. There will still be structural overcapacity and very high debt. We do think in general that the industry will be able to resume the slow fixing process that was under way before the virus struck toward the end of the year.”
He said one of the priorities for international shipping remained the improvement of reliability and predictability.
Service deterioration had been a major concern. In a survey conducted in April it found that 83% of shippers who participated had had cargo rolled, while a survey of carrier schedules in April, May and June revealed that all three carrier global alliances had cancelled at least four times as many East-West sailings in the second quarter of this year as in the same quarter of 2019.