Two years post Covid-19, the shipping industry has not fully recovered from its effect. Surging gas prices, global port congestion, and supply chain disruptions are challenges we now face. Unfortunately, this new normal might be our companion for longer than we expect.
In 2020, the elongation of the ship delivery time birthed global port congestion. Subsequently, this made the ocean freight rates to be on the rise. While the shipping industry tried to make remarkable progress with business operations, the Russia-Ukraine Conflict became intense. It has also affected the smooth shipping operations.
How Long Will the Global Port Congestion Last?
A significant number of people are anticipating that the global port congestion to end this year. But the hopes of such news were dashed recently when Peter Sundara gave his predictions.
Peter Sundara is the head of Global Ocean Freight Product for the global logistics division at Visy Industries. He gave his prediction during a session at the S&P Global Platts Bunker and Shipping summit. According to him, the current global port congestion will last till the first quarter of 2023. He further mentioned that the worldwide port congestion would continue, and the landside infrastructure would be inclusive.
Sundara hinted that the global fleet would have more vessels next year. However, this does not guarantee a drop in ocean freight rates. The possibility of such a drop in rates is dependent on how cargo ship carriers allocate increased vessel capacities.
Factors Responsible for The Global Port Congestion
Aside from the post-covid-19 effects, other factors are responsible for the global port congestion. No doubt, the Covid-19 pandemic took a toll on shipping. Consequently, several ports were not functional during the period, resulting in global port congestion.
However, it is impossible to isolate the Russia-Ukraine war from the global port congestion challenge. As a result of the unrest, Russian forces were forced to shut off shipping routes. In addition, Logistics firms had to shut down. It made it impossible for several cargos to leave the port.
Consequently, freight prices were on the rise. Undelivered vessels began to pile. Eventually, the effect became so apparent in ports globally. The impact of the war did not stop at ports having undelivered cargo.
As the war got intense, several shipping crew members quickly became stranded in the middle of the war. The fear of the safety of crew members stopped ship owners from sending vessels to the affected countries. Of course, the ports need to house these vessels.
Another major factor that contributed to the Global port congestion is the Shanghai Lockdown. The Chinese city’s lockdown, a global trade hub, affected ports in no small way. Although this is unprecedented, it has taken longer than the worldwide market can accommodate.
State of The US Ports
The fluctuations and continuous increases in shipping costs have tremendously affected those chartering vessels and storage. Consequently, they are advised to sign long-term contracts with ship owners. In this case, “long-term” is not a matter of months or a year. The recommendation to the charterers is to sign contracts of a minimum of two years. That will help cut down on the losses charterers have been experiencing recently.
Despite the challenges with the shipping costs and global port congestions, Metti International’s commitment to its customers is unwavering. Metti International is your trusted and reliable car shipping company. We have an A+ rating and excellent customer reviews. Our track record of excellence has earned us the BBB Torch Award for Ethics thrice. We only work with carriers with 95% or higher service ratings to ensure you get your car timely and safely.