Despite the obvious slump in volumes in the first half of 2020, as a direct result of the coronavirus pandemic, the signs are that shipping lines are to be in a good position by the end of the year. Hawley Logistics have found sea freight to be more robust than other modes of transport during this crisis.
Initial forecasts as the coronavirus crisis escalated made for bleak reading. It was estimated that if the predicted 10% slump in volumes were coupled with the typical collapse in rates usually associated with downtowns, the container shipping industry could stand to lose as much as $23bn. Worst-case scenarios were even more pessimistic. Experts warned that a decade’s worth of shipping line profits might be wiped out. It looked as if the doom and gloom that seemed to shroud all sectors as the pandemic crisis developed was going to have a massively negative impact on the sea freight industry too.
Those gloomy early predictions have been overtaken by a healthy dose of better news and positivity. Unsurprisingly, volumes fell significantly in the first half of the year. However, this drop has been offset by the capacity management measures put in place by shipping lines. Not only have rates been maintained, many trades have even seen a significant increase. This surprising bounce-back has shown the strength, versatility and adaptability of the industry.
It should be noted that as rate levels increased in 2019, any year-on-year comparison with coronavirus-hit 2020 is likely to appear to be disappointing. Measured by the CCFI Index, the freight rate increase to August stands at 6.9%. This is only marginally lower than the figure from two months ago.
More calls for positivity come from the revised volume outlooks. The revised projections for the third quarter of 2020 now suggest only a minimal decline in volume of just 0.1%. If the current situation develops as expected, a 2% volume increase overall would be seen in the final quarter of the year. Considering the pessimistic outlook that given earlier in the years, any volume increase really is a fantastic achievement. Strict capacity management is at the heart of this success and the healthy projections the industry is now seeing.
All in all, it seems extremely likely that shipping lines will see better financial results this year then they saw in 2019. All things considered, that will represent a significant achievement given the effect coronavirus has had on the global economy in 2020.
Hawley Logistics are sea freight experts based near Manchester. With 35 years of experience, Hawley Logistics are the experts in all logistical and documentation processes related to sea freight. We can take care of all aspects of customs, seaborne freight, and the transition from shipping to road freight.