In 2020 and 2021, we faced many difficulties in logistics like limited storage space, jaw-dropping freight rates, port congestion, and truck shortage. One of the biggest misfortunes was the Suez Canal blockage which led to a loss of 9.6 bn USD in international trade. In this article, we present the freight rate forecast for 2022 and shipping predictions for the year.
Freight rate forecast 2022
It is estimated that freight rates will be corrected and will drop by 30-40% in 2022. The fact that freight rates drop is good news, especially for importers. However, it is highly unlikely that they will drop back to the 2019 level.
Let’s recall the situation in the previous years. In 2020 many factories shut down manufacturing or halted production for a more extended period. Since the demand (especially in e-commerce) surged, it put pressure on shipping agents and further complications arose. Despite the shipping fleet being fully deployed, it is not enough.
Look at the line graphs below to see how the freight rate has changed over time.
Outlook for 2022 in transportation and logistics
More spots on ships
Recently, it has been more challenging to find a place on a container ship; in August 2021, delays caused the transport capacity to decrease by over 3.1 million TEU (12.5% of sea transport). In 2022, this situation is to change for the better – it will be easier to secure a place for a container.
Since there will be more shipping spots, more containers will be for hire. It is estimated that containerized export will increase by 2-3% in 2022.
In 2022, the global fleet will be expanded by many units. In 2020, the fleet increased by 3%, in 2021 – 4.3%, and in 2022 it is expected to increase by 4.5%. However, the biggest increase is forecasted for 2023 – 7.5%. In 2022, at least 22 large container ships (COSCO Shipping, CMA, OOCL, and MSC) are set to debut.
New players will appear on the shipping market: Taiwan and Thailand. Taiwan plans to launch 46 containers, and the Taiwanese carrier Wan Hai Lines intends to expand its Trans-Pacific range. On the other hand, Thailand wants to launch new container lines; therefore, by 2025, it will order several containerships.
Even before Ever Given got stuck in the Suez Canal, congested ports were day-to-day reality, especially those with the highest throughput. On the US West Coast, for example, as many as a hundred vessels waited for their turn, far more than the ports could handle jointly at the same time. This trend will continue in 2022 but will lessen over time. Lowered ports capacity has to do with limited staff and ports not being adapted to accommodate many ultra-large containerships.
Shortage of staff
There are many vacancies in the supply chain, starting with warehouse managers, warehouse operatives, to truck drivers (especially in the US and the UK). Movement restrictions make the situation even worse.
Raising fuel (and shipping) prices
Transportation runs on raw materials, and we have been observing rising crude oil and natural gas prices for 6-7 years. Many businesses rely on logistics, and discrepancies in the supply chain lead to losses. In one year, the average bunker (marine fuel) increased by 74%. Empty truck’s fuel tank is a way of cutting costs, but these trucks are not ready to be dispatched if needed (not to mention the chip crunch). In this regard, it is important to gather data and design optimal transportation routes.
Shipping predictions for 2022 – to sum up
In conclusion, in 2022 we will not see freight rates at the 2019 level, but they will stabilize, and it will be easier to plan shipping. In 2022 we will probably see:
- Significant delays in shipping before the Chinese New Year
- More shipping spots
- Port congestions
- More containers for hire
- Shortage of staff
- More ships
- Raising fuel prices.