Shippers found alternatives to ocean carriers in Q3

Shippers found alternative means of getting their goods to market in the third quarter as available container shipping services maxed out and service patterns changed to serve congested routes.

According to the Global Shippers Forum’s Container Shipping Market Quarterly Review, global trade continued to grow in the third quarter of 2021. However, with deployed container shipping capacity fully utilized, that additional growth was being moved by a mix of air freight, rail services between China and Europe, and own-charter vessels or services provided by non-liner carriers.

“The Container Shipping Market Review shows the extent to which shippers sought out alternatives, as shipping lines priced themselves out of reach and narrowed the cost difference with offerings from other modes,” said James Hookham, GSF Director.

“The Great Shipping Crisis of 2021 has taken many casualties as shippers trapped between record rates and very poor service levels struggled to fulfill delivery deadlines for imports destined for the holiday sales season. Shippers will be watching anxiously to see how quickly these conditions abate in 2022, and whether the use of these alternative services will continue to grow.”

Shipping lines are attribute the crisis to severe congestion in ports and logistics bottlenecks inland. This means that as these conditions ease after the peak season and output dips in Chinese New Year, container shipping capacity levels should increase to match shippers’ demand more closely.

“This recovery in capacity could accelerate if consumers switch spending to services rather than goods, and interest rate hikes and higher energy costs take their toll on discretionary spending,” Hookham said.

The Review reveals the extent to which shipping lines have adjusted global service patterns. Many more ‘shuttle services’ have been introduced at the expense of services making multiple port calls in different regions. This reduces the number of countries with direct connections to their export markets and requires more frequent transfer of loads between services at hub ports, such as Singapore and Colombo.

“Our review this quarter has examined how alliance members have expanded their role in developing consortia and therefore market shares and the way in which they have addressed operational challenges in modifying route structures. This reduction in services linking multiple world regions has been accompanied by a decline in the number of countries that are directly connected,”said Mike Garratt, chairman of MDS Transmodal.

“Given the dramatic growth in freight rates and declining service performance it is not surprising to see trade growing more quickly than container volumes on the established lines, as shippers have found other transport solutions; starting own shipping routes, using long-haul rail or air or semi-bulk traffics switching to conventional methods.”