The global shipping industry is concerned about the situation of the southern Chinese ports; including Yantian, one of the most active ports in the country, which, after having decreased its activity due to a COVID-19 outbreak, has announced that it's working up to 50% of its capacity, serving 5,000 to 6,000 trucks through the port daily. Jon Monroe, maritime, port, and logistics sector analyst, stated in his weekly report that "several shipping lines have announced that they will not accept reservations for said terminal until July 1."
"Yantian has a backlog of 160,000 to 175,000 containers. If we do the math and the terminal works at, let's say, 70% of its operating capacity, it would still have a 12,000 TEU/day delay. What will happen on July 1?" Monroe wondered. "You have to take into account the large number of vessels that will be diverted from Yantian and the impact it will have on the repositioning of empty equipment. Maersk has already announced that more than 60 ships will bypass the port and there are currently approximately 60 ships waiting for a berth in the port with a waiting time of 16 days."
How high will the rates go?
In this complex context that affects global maritime logistics charter rates have continued to rise while, as Monroe claims, the service quality has fallen. The analyst said that ship arrival was in such disarray that the shipping lines' service had become non-existent. In fact, he stated, the integrity of the schedules in April only reached 22.2%.
According to the analyst, the premium rates alone are 2 to 3 times higher than the rates contracted this year. "Where will rates peak? 20,000 dollars? $30,000? A year ago we thought that $ 10,000 would be too much. The rates have to go down at some point. However, we'll never see them below 2,000 dollars, as they were in previous years. Neither should we. There has to be a middle ground, but I don't think it's 10,000. I feel sorry for the companies that thought rates would go down again this year," Monroe stated.
In this context, two new shipping lines are entering the Trans-Pacific route: BAL Lines and CU Lines. Each of them appears to be contracting vessels of approximately 2,400 to 2,500 TEUs, he said. "There are rumors that a few more shipping lines will go into business this year. With charter rates at an all-time high, it seems unlikely that the new entrants to the Trans-Pacific route will offer lower rates than the current ones," he stated.