Ocean freight amid the pandemic: sailing on rough waters
The efficiency race among ocean freight companies has led to a few major bankruptcies and a new round of consolidation. With 10 carriers controlling 85% of global container capacity and the creation of 3 main operating alliances (2M, Ocean Alliance, The Alliance), the ocean freight offer has been significantly reduced and product differentiation is now very limited (routing, transit time, port of calls, etc.)
This situation of dependance on a limited offer of very large vessels has increased the impact of incidents or delays. And when the sanitary crisis came, provoking major logistics disruptions, it resulted in severe price hikes, continuous delivery delays, misplacements, and container space shortages.
However, if the situation has not yet recovered, it is not totally the ocean freight carriers’ fault. Because of the various lockdowns, global demand is now peaking, and the global sea freight capacity cannot keep up with it. To make the situation worse, about 15% of container carriers are caught in bottlenecks at the ports that have no slots available or not enough workforce.
Does this mean that companies will have to switch to other shipping means in the future? Not necessarily, but as ocean freight is an unpredictable market where shippers have limited leverage, they might need to use some help to reduce expenses, ensure container capacity and service reliability.