Shippers must prepare for events in which the tight container market may not normalize until 2024, according to a new analysis by McKinsey & Company. But the consultancy told ShippingWatch that shipping rates could end up being 50% higher than pre-pandemic figures.
The container market has been strained since mid-2020 due to the huge demand for goods in the United States, port closures due to the pandemic, container shortages and extreme congestion at the world's largest and most important container ports.
The result of the tight market is the soaring of container freight rates. The revenue and profit of container shipping companies in the past two years have experienced historic growth. Last year, the total revenue of the top ten shipping companies exceeded 100 billion US dollars. The punctuality rate has fallen to its lowest level in more than a decade.
Some shipper companies, which are customers of container shipping companies, have not stopped complaining about these situations for a long time, and they even believe that container shipping companies should be more strictly regulated.
But this recent McKinsey report throws cold water on shippers.
McKinsey, one of the world's largest management consulting firms, expressed its views on the current container shipping market in a report entitled "Navigating the current disruption in containerized logistics". A large number of new ships have been ordered to expand capacity, but the normalization of the container shipping industry may still be delayed until the first quarter. If the situation is worse, normalization of the market may take until after 2024.
McKinsey also noted that container freight rates will remain high for most of 2022, while disruptions to the container logistics supply chain will continue.
Steve Saxon, a McKinsey partner who is now a container market analyst based in McKinsey's Shenzhen office, said that if you asked us a few months ago for our views on the future of the container industry, we might also lean towards a positive (recovery) view. But right now, McKinsey is leaning more toward a pessimistic outlook -- bad news from a shipper's perspective.
McKinsey proposes four possibilities for the future development of the container shipping market.
In the most optimistic case, the container shipping market may return to normal in the third quarter of 2022. Normal freight volumes, normal capacity offers, and normal freight rates.
But McKinsey also said that the most optimistic scenario may not be possible.
