Month: June 2021

Sea Freight: What Scenarios For The Sector In 2021?

Sea freight is a sector under high tension in 2021, due to the many uncertainties weighing on world trade, in part because of the health crisis of Covid-19.

Drawing up a range of scenarios for global ocean freight in 2021 is not an easy exercise. And for good reason, those who risked it in 2020 saw their predictions strongly thwarted.

The Stigma Of 2020: Uncertainty at The Heart of All Debates Around Sea Freight

The year 2020 has profoundly changed the balance of global maritime transport: shippers have not been able to build their competitiveness on their ability to achieve economies of scale and optimize their costs. The drastic drop in the volumes of goods exchanged has also upset all the speed and cost reduction objectives pursued by supply chain managers.

Establishing a precise timetable for the normalization of international trade would be very imprudent. However, here are the main criteria that will influence global demand during the year:

  • The progress of national immunization campaigns around the world should continue to support the level of demand
  • The proper application of the main stimulus plans and other support mechanisms for economies should also support the level of demand.
  • The relay of e-commerce to overcome business closures and administrative restrictions is a new high-growth distribution channel
  • Business confidence in the healing pace of the global economy is another key issue for the expectations of economic agents.

The Main Scenarios for Sea Freight In 2021

The year 2021 will probably not be the year of a return to normalcy. The persisting global health crisis and the slowness of vaccine policies in Europe lead to general anticipation of a drop in transport capacities compared to the pre-crisis level. However, the start of 2021 saw demand soar, causing freight rates to rise sharply The lack of places available on-board ships particularly affects flows between Asia and the Middle East. Also, food products with historically low margins have difficulty supporting this increase in transport costs.

Thus, sea ​​freight rates are mostly expected to rise: demand remains very strong and capacities limited, which leads to a significant increase in prices. The overload related to Peak Season Surcharge or lack of equipment should continue to multiply.

Some experts anticipate a decrease in demand during the second half of 2021, due to excess stock and bankruptcies linked to the end of economic support measures. This feeds concerns, in particular for SMEs-SMIs dependent on exports.

Finally, a final scenario of conflicts between shipping companies and shippers cannot be ruled out. The hypothesis of legal action against shipping companies for abuse of a dominant position, due to excessively high tariffs, could lead to the emergence of new logistics patterns, via substitution of flows towards the rail. The rail links at high speed between Asia and Europe have already developed significantly since the beginning of the health crisis and could take a place more and more. The price stability and the sector’s capacity to address the global demand levels remain uncertain.

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