The Covid – 19 pandemic started in March 2020. Now it is August 2021 and there are still visible consequences in every segment of our lives. The economy in the whole world has suffered great financial losses. One of the affected businesses was also moving companies in Jeddah, like in the rest of the world. But the most affected were logistics companies with the rise of shipping prices. The future tendencies still remain mostly unknown, but there are forecasts about the sea cargo pricing in 2022. Read on to find out more.
Sea freight rates will remain elevated
Economists think that the sea freight demand will remain bigger than the available container’s capacity on a global level. They forecast it to last this whole year and into the next year. The elevated prices are a good thing for a cargo transport company, but not so good for shippers. This is because they keep paying premium prices to be able to move their product.
Demand for goods also remain very strong
Bussines and consumer demand for goods remain strong outgrowing the available container capacity. The new vessels that will enter the market will not make much difference at all. This happened due to the fact that the new ships are already booked till 2023, making it a record in booking vessels. Global demand will outgrow the shipping capacity, with the growth of demand between 5 and 7% against the 4% growth of capacity. Sea cargo Jeddah transportation, alongside others, will be disrupted during this whole year and into the next one.
The imbalance favors the shipping lines
Shipping lines have been favored by the imbalance for months, with increased profit for the carriers in the first quarter of this year. The previous ten years’ quarters combined are smaller than this year’s quarter alone. We don’t know the results of the second quarter yet, but economists speculate that it will be even bigger than the first one.
Operating profits for this year and sea cargo pricing in 2022
The operating profits for 2019, 2020, and 2021 are the following:
- $5 billion in 2019
- $26.6 billion in 2020
- $35 billion in 2021 (sea cargo pricing in 2022 is expected to grow)
Some speculate that the levels will reach up to $100 billion for the shipping industry this year. Even with the record rate levels, the demand is much bigger than the capacity. For this reason, shippers pay premiums to carriers to ensure space for freight forwarding. These premiums go up to a thousand dollars per container and it still doesn’t guarantee space.
The average prices
The worldwide average price to ship a container has quadrupled since last year and it costs $8,399 to do so. For last-minute agreements, the prices skyrocket up to $20,000 for a container. The shipping sector sees no relief on the horizon for 2022, because of the still occurring supply chain bottleneck all over the world.
Sea cargo pricing in 2022 – Conclusion
Taking everything that was previously said into consideration, there is no end in sight. The global economic effects of Covid – 19 are too strong to be overcome so fast. Even tho there are mostly expectations, all of them state the same thing, it won’t get any better soon. There is no space for improvement during this peak season, but maybe there will be improvement around Lunar New Year 2022 when Chinese factories shut down.
