Has the peak in container shipping demand passed?

The demand-led surge that propelled container shipping to record gains during COVID-19 is now a thing of the past.

Statistics on supply and demand for COVID-19 confirm a growing consensus that volumes are declining and only supply chain disruptions such as port congestion are helping to support freight rates.

From November 2020 to January 2022, global demand consistently exceeded capacity by 10%. However, the gap has been narrowing, with the latest figures for June showing it had narrowed to 1.99 per cent compared to pre-COVID-19 levels.

The data shows that the extreme surge in freight rates in 2021 is indeed driven by a sudden surge in global demand over capacity – but we can also clearly see that this is largely driven by a lack of capacity.

The recent normalization trend is largely driven by gradual improvements in schedule reliability and vessel delays, and forecasts that the supply-demand balance will continue to decline, putting increasing downward pressure on freight rates.

Freight forwarder CH Robinson warned in its August market update that import demand was falling due to inflation and overstocking in the U.S. and Europe, even as congestion persisted and labor strikes in Europe undermined port productivity.

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