The worst is over for global supply chains, but trade group says shipping faces lingering issues
The MSC Regulus container ship, operated by Mediterranean Shipping Co. (MSC), left, the Monte Verde container ship, operated by Hamburg Sud, centre, and the OOCL Germany container ship, operated by Orient Overseas Container Line Ltd., docked at the Port of Felixstowe Ltd., a subsidiary of CK Hutchison Holdings Ltd., in Felixstowe, U.K., on Thursday, June 24, 2021.
Chris Ratcliffe | Bloomberg | Getty Images
The worst is over for global supply chains, but not all problems the shipping industry faces have gone away, said the chairman of a shipping association.
“There may still be swings, but overall, I think the worst is over,” Esben Poulsson, who chairs the International Chamber of Shipping, told CNBC’s “Squawk Box Asia” on Tuesday.
Poulsson explained that retailers had made a “significant level” of pre-orders, and that should help ease shortages of goods. In addition, new container ships are being built and will add to existing capacity in the next 24 to 36 months, he said.
Global trade rebounded strongly after a slump in the initial months of the Covid-19 pandemic.
Freight rates spiked as shipping companies, logistics providers and ports struggled to keep up with the jump in trade volume, while Covid resurgences in parts of Asia earlier this year threatened the supply of goods from electronics and auto parts to coffee and apparel.
The World Container Index compiled by Drewry, a maritime research and consulting firm, indicated that global freight rates inched 0.5% lower to $9,146 per 40-foot container in the week of Nov. 18 compared with a week ago. But rates remained 238% higher than the same week last year.
The shipping industry still has some lingering problems, said Poulsson. That includes the difficulties in crew changes and the slow progress in vaccinating seafarers, he said.
Many countries have continued to impose travel restrictions to curb the spread of Covid. That has impeded the ability of some seafarers to travel between ships — their workplace — and their countries of residence.
Such a situation was made worse by seafarers’ limited access to Covid vaccines at a time when many countries require travelers to be fully vaccinated.
Poulsson said more seafarers have been vaccinated, which offers “some improvement” to the situation. A report by the non-profit Global Maritime Forum said the proportion of seafarers who have been vaccinated rose from 31% in October to 41% this month.
But “this problem has not gone away,” said Poulsson. He explained that his organization has been urging governments to designate seafarers as “key workers” so that more could be prioritized for vaccination — but many countries have failed to do so.
“Although there have been some change and some improvements, the problem has not gone away and will not go away until governments fulfil their obligations properly,” he said.