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Supply and demand in container shipping

Supply and demand in container shipping

While shipping provider function shows the amount of shipping by ocean carriers that will be offered at each freight rate. The shipping request function on the other hand shows how the shipper adjusts their requirements for changes in freight rates. The global market relies heavily on shipping companies encouraging different countries to import and export anything on the planet.
What has changed, very simply, is COVID. During the 2020 lockdown, as consumer spending in the U.S. shifts from services — travel, leisure, and entertainment — to home improvement, and from traditional to e-commerce, the supply chain containers have come under unprecedented pressure. Ecommerce requires fulfillment centers and the capacity of fulfillment centers is far from being prepared. It is still not prepared for today. We had an exponential growth during the years of COVID19 of e-commerce, backed also by the governments providing stimulus programs to increase purchasing power. As a result, container imports into the United States in 2021 compared with 2019 increased by nearly 20%, a much higher rate of growth in the decade before COVID. It is expected to continue to grow as the global economy improves and new opportunities emerge.
Global demand was consistently 10% above capacity between November 2020 and January 2022, according to Sea-Intelligence. Below are some of the global trends affecting the current market situation:
   • Reduced demand for shipments to and from the Far East: last year, we could see a
slowdown in growth expected, resulting in reduced demand for shipping to and from the Far East.
   • The growing demand for customer orientation and new technology: more transparency is needed throughout the supply chain, from producer to receiver, with ambitions in
developing processes and sharing common IT systems.
   • Industries are adapting their shipping to container shipping.
   • Redundancy in the container segment does not correspond to financial cycles: timing is
another important factor in balancing supply and demand. This is a difficult task in an
unstable market where prices fluctuate wildly and with uncertainty.
   • Capacity at ports is growing faster than trade volume: in some regions, there are a few
seaports causing imbalance between supply and demand.
Carriers must choose which port to invest in.

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