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An Overview of the Year So Far and What’s to Come

Get a full understanding of the Ocean Freight market situation as capacity constraints and equipment shortages drive freight rates to a historically high level. Congestion in many ports and schedule reliability at an all-time low create supply disruptions across the globe – see how DHL Global Forwarding takes action to mitigate the impact on your shipments and adopt our recommended best practices today.

Schedule Reliability Reaches Record Low, and Will Deteriorate Further

The schedule reliability has been on a sharp decline over the past months and fell to as low as 34.9% in February, not a real improvement from the lowest ever record of 34.8% in January. Most affected are shipments on the Transpacific to the US West Coast (11.0% reliability) and from Asia to Oceania (12.7% reliability).

The weeklong Suez Canal blockage in March is further aggravating the situation. Heavy port congestion in Europe is leading to additional infrastructure constraints, while the empty equipment situation is further worsening globally as vessels are not rotating timely.

DHL Global Forwarding expects that the full impact of this marine traffic jam will not be fully sorted out before yearend.

Customers, forwarders and carriers will have to continue to work jointly to overcome this industry challenge initially caused by the pandemic and now aggravated by the Suez Canal incident.

The Impact of COVID-19 on Global Shipping

Status after Q1 2021

  • Strong demand on all Asia outbound trades
  • Lack of empty equipment in Asia + Europe
  • Freight rates on a historically high level
  • Schedule reliability at an all-time low
  • The Suez incident negatively impacts global supply chain
  • The port congestion creates  severe bottlenecks 
  • No signs of a swift recovery
  • No vessels available to start new services

Prediction for the rest of 2021

  • Freight rate bonanza on Transatlantic, Asia-Europe and Transpacific
  • Demand does not soften in Q3
  • Sailing schedules to become more reliable as of Q3
  • Equipment availability will improve as of Q4
  • Ocean carriers continue to control capacity
  • All vessels in service
  • Carriers in the driver seat à Seller’s market

Recommendations for Shippers to Face the Current Challenges, and Our Actions to Mitigate the Impact

All capacity will be managed tightly by the ocean carriers and adjusted quickly. As a result, schedule reliability will remain a challenge - shippers should allow for sufficient lead time buffers.

Consider entering binding volume agreements: try forecasting your volumes as accurately as possible and deliver against forecast. Delivery against commitment will be essential to all parties, shippers and ocean carriers alike.

Allow flexible pricing models: supply chain resilience will win over lower costs.

  • Acknowledging that market conditions are different from the past, we have entered blocked space agreements with ocean carriers, negotiating binding long term commitments with them.

    We have also implemented a Shipper’s Owned Container (SOC) program to address the equipment imbalance, and wherever necessary, facilitate transport mode shifts to rail or air freight. We are also rolling out a predictive time of arrival tool to bring more transparency to our customers.

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