Trouble in the global supply chain, which relies heavily on the container shipping sector, is likely to continue throughout 2022 in light of the resurgence and spread of more contagious COVID-19 variants.
Port congestion in Asia was like “whack-a-mole” last year, as key hub ports suddenly closed due to worker infection. The ripple effects of the congestion flow right through to schedule reliability as ships queue up to be berthed.
Global capacity as a result could be cut by 15 to 25 percent in some trade lanes, or in some reports an aggregate of 12.5 percent slashed. Such chaos can only be relieved when the shore side is able to fully let off goods that flood major seaports, which are apparently overloaded with current designed capacity.
Ship’s crew change has also become an adverse factor adding to uncertainty of schedule reliability. Multinational crews make this issue even more difficult to manage, since quarantine requirements differ from one port to another. Ships often need to detour to complete crew changes, which means extra time is consumed, and it seems inevitable that they will continue to do so until worries about COVID-19 infections are dissipated from our daily life.
As the industry’s orderbook-to-fleet ratio continues to rise, concerns about oversupply from 2023 onward will be reignited. However, the industry can anticipate that the International Maritime Organization’s EEXI/EEDI regulation, which goes into effect in 2023, will leave the industry without much choice but to delete old tonnage that would have been phased out during 2020–21 but continued sailing due to strong demand and record-high container freight rates. The comparatively higher level of scrapping activity from 2022 on should offset the orderbook substantially and minimize anxieties about overcapacity from newbuild deliveries.