Container xChange says results show Global concern over further Covid disruption
A worldwide survey published by global logistics platform Container xChange shows that 75% of the container logistics industry is rethinking its logistics strategy in the next year.
The survey results indicate that firms are expecting gloomy times for this industry as it faces resurgent containership lines.
The top challenges remained finding spots on ships and surcharges by carriers.
One-way leasing emerged as the most sought-after alternative as compared to getting equipment from the carriers.
The xChange Industry Speak Survey 2021-22 took in some 800 container logistics players globally including shipping lines, container traders, freight forwarding companies, NVOCCs, shippers and procurement companies.
The objective was to study the industry sentiment, key learnings from this year and the outlook for the year 2022 from the players.
Key findings were:
- The industry is downbeat about the supply chain performance in 2022. Out of the total respondents, 65% said that the performance will either deteriorate further (11%) or seem to remain the same (54%) in the year 2022
- The top challenge that the respondents experienced to conduct business was finding slots on the vessel (53%), followed by surcharges by the carriers (22%) and labour shortage (19%)
- The remaining respondents (6%) highlighted the challenge of lack of transparency and visibility into the supply chain
- When asked what alternatives compared to getting equipment from carriers attracted them, 50% of respondents said they resorted to one-way leasing followed by long term leasing contracts (28%) and buying containers (22%).
- Overall, 71% of respondents said they were rethinking their logistics strategy and they are looking for more diverse sourcing and are resorting to holding more inventory
- The main causes of container shortage this year, according to the respondents, were – shippers using boxes as storage (42%), container line failures (28%), inefficiencies in matching box owners to potential users (28%), and longer transit times and port congestions that made container rotation slower. (The company notes that this was a multiple-choice question and hence will not add up to 100% when adding up the percentages)
- When asked ‘who emerged as the biggest winner of the global supply chain crisis’, the industry unanimously echoed the opinion that container lines (64%) were benefitted the most out of the disruptions followed by shippers (21%) and freight forwarders (15%)
- 75% of respondents said that Covid-19 impacted their Business. Out of these 75% respondents, 54% said the pandemic resulted in lower profit margins, 36% said it resulted into less transparency and 36% said they resorted to more digital solutions during these tough times. (Again, this was a multiple-choice question).
Container xChange observed that, just when 2021 saw a slight recovery from the pandemic, the new variant made a dramatic entry and shook the industry once again.
Read about the federal probe into container ports, here
“We foresee that Covid-19 and its new variants will continue to disrupt the port operations and labour capacity as we progress into the year 2022,” joint co-founder and CEO Christian Roeloffs said.
“Persistent unpredictability is warranted. We’ve also started to observe container prices and leasing rates going down.
“Once prices slide significantly, they risk crashing. If we look at the current demand, we see that the demand for containers hasn’t increased significantly.
“The current spike in rates is caused by a temporary supply crunch.
“But with disruptions such as labor union conflicts at US ports easing up, we’ll also see the capacity challenge improving.
“However, the ‘return to normal’ seems to be coming earlier than many of us first anticipated – and it might be as early as the second half of 2022.”
Joint co-founder and CEO Johannes Schlingmeier indicated that, along with bumper profits, this year had given container shipping lines a huge injection of pricing confidence.
“2021 was an outstanding year for the shipping industry,” Schlingmeier said.
“The staggering earnings and profits for ocean freight companies have surpassed the combined industry profits made over the whole decade. It was also a year that showed that shippers were ‘willing’ to pay higher prices for shipping.
“Now, those earnings and profits will need to prove that this money can be put to good use to improve service levels across the industry.
“This has to go beyond the traditional levers of investing in more container capacity – but also into landside infrastructure, inland transportation and infrastructure for cross-industry collaboration to build resilience for the industry.”