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Home Latin America

Shippers expanding container fleets, but port congestion, strong demand likely to keep rates elevated

MtR by MtR
June 7, 2021
in Latin America
0
Shippers expanding container fleets, but port congestion, strong demand likely to keep rates elevated


HOUSTON (ICIS)–Container shipping companies
are investing in new capacity, but rates are
likely to remain elevated amid the global
shortage that has seen average container costs
rise by three or four times, especially for
material from Asia to Latin America.

On Friday, German container shipowner
Hapag-Lloyd announced that it has ordered
60,000 TEU (twenty-foot equivalent unit) of
shipping containers in May on top of the
150,000 TEUs it ordered in April.

Global shipping major AP Moller-Maersk said during an
earnings conference call in May that it has
increased its capital expenditure (capex)
budget for 2021-2022 to $7bn from $4.5-5.5bn,
with some of that to be spent on additional
containers.

But other issues, such as congestion at ports,
sailing delays, capacity imbalances (especially
from Asia) and delays in inland transports,
combined with continued strong demand for
imports in the Americas are likely to keep
container freight rates elevated.

The current dynamics have led to containers
being tied up for longer periods of time, which
means shipping companies need more containers
to transport the same volume at the same rate
of sailings.

Hapag-Lloyd said that the first containers from
the new order should be close to being
delivered and integrated into its existing
container fleet in early July. The majority
will be delivered in the third quarter.

Maersk executives said in May that containers
can typically be ordered and received within
the same quarter.

ELEVATED RATES
Shipping
container rates remain near all-time highs,
although some market participants have seen
them come down a bit.

An importer on the west coast of South America
said it was quoted $8,900 for a 20-foot dry
container with about 36 days transit time from
Shanghai to Brazil.

Market players have said container rates have
historically been around $2,000 per container.

This is down slightly from earlier this year
when some in the market saw container prices as
high as $10,000.

CONGESTED PORTS, TRUCKING AND RAIL
WOES
Demand for imported goods
rose during the pandemic, as US consumers
stopped spending on travel and leisure amid
efforts to help stop the spread of the
coronavirus pandemic and instead bought goods.

As the US and other economies began to reopen
following lockdowns, the demand continued to
grow.

A winter storm that shut down a lot of chemical
production in the US Gulf for a period of time
added to the supply chain constraints and
shipping delays.

Even before the shipping issues arose, the US
was already dealing with a shortage of truck
drivers and dealing with increased delays from
rail providers.

Railroads have seen some improvement.

But the shortage of truck drivers has gotten
worse as most driver schools were forced to
close in 2020 because of the pandemic.

Focus story by Adam Yanelli

Additional reporting by Luly Stephens,
Renato Frimm

Photo: Stacks of containers at a container
terminal (Image credit: Imagine
China/Shutterstock)



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