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U.S. consumer demand continues to drive up freight rates

Time:2021-06-07 Publisher:Kevin Num:4363

Industry analysts said freight rates will remain high for at least three to six months due to the combined impact of high demand and supply chain disruptions.

Petersand, chief shipping analyst at BIMCO, said rates will continue to remain high as the traditional container shipping season approaches.

The container shipping market is largely driven by consumer demand in the US, thanks to a series of financial stimulus packages. Because the logistics supply chain dilemma is difficult to solve in a short time, freight will still be at a high level for a period of time.

Peter believes the shipping market has upside potential as personal savings levels remain high. In the first quarter of 2021, global container shipping volume increased by 11% from a year earlier and by 6.8% from the 2019 pre-epidemic level. On the West Coast of the United States, shipments are up 40 percent from the same period in 2020.

The ratio of US retail inventories to sales shows goods are being sold faster than they are arriving, suggesting the boom in demand has some time to run. The impact of the outbreak could also cause stocks to exceed normal levels. 

The outbreak has slowed a global trend of destocking before the outbreak, while supply chain mismatches, the Suez accident and other factors have prompted retailers to start stockpiling more goods in case of accidents.

However, the nature of supply chain globalization has not changed fundamentally. For shippers suffering supply chain disruptions, the option of relocating their factories closer to consumption may seem more attractive, 

But it comes at a cost and there are no shortcuts. As a result, production facilities are not expected to be fully repatriated, and companies are more likely to build up inventories closer to consumers, but all this comes at a cost.

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