Looking back at the past year, nothing has been normal in the global markets – nor will things return to normalcy anytime soon.
The level of optimism varies from company to company and executive to executive, but at freight forwarder DSV Panalpina the message is quite clear. As such, DSV Panalpina expects to see capacity limitations and high rates in the market for ocean freight well into 2021.
“We expect that the tough situation we see right now will continue for the remainder of the quarter. Then we will probably start to see some kind of softening, but it’s not as though we’ll return to normalcy. If we return to normalcy in the second half-year, I think we should be pleased,” CFO Jens Lund tells ShippingWatch.
If we return to normalcy in the second half-year, I think we should be pleased
Lund points to a combination of equipment shortages and global trade growth as the reason for why the market has been “drained” of the capacity.
“Those are the factors that have created this unprecedented situation,” he adds.
According to DSV Panalpina, global ocean transport volumes dropped 3-5 percent in 2020, compared to 2019. Isolating the Transpacific routes, however, volumes increased 4 percent in 2020.
The routes between the US and China are also the ones that have received the most attention in recent months, as significant queues have formed off the major ports on the US West Coast.
These queues have created significant challenges in the market, wrote DSV Panalpina in its annual report last week.
Only transports 2.2 million teu
The routes out of Asia have particularly seen an increase in demand, and Maersk CEO Søren Skou recently said that this trend has now started to affect the prices of the long-term contracts that the shipping line is currently negotiating with its customers. And logistics company Scan Global recently said that they see contract price increases of between 50 to 75 percent.
Furthermore, the challenge with securing capacity led DSV Panalpina to opt for a rather unusual measure back in December, when the logistics company chartered three smaller vessels to solve a large, Danish customer’s challenges with getting goods shipped from Asia to Europe. Despite the continued market challenges, the logistics company does not expect to deploy similar measures again.
“That’s not in our plans. This instance only shows our competencies for a few individuals that have specific challenges,” says Lund.
Freight volumes at sea increased 16 percent for DSV Panalpina in 2020, however, this increase is largely attributed with the acquisition of Panalpina. Measured in volumes, DSV Panalpina handled 2.2 million teu in 2020 against 1.9 million teu the year before.
English Edit: Ida Jacobsen
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