It will take two to three years before ships ordered today start rolling down slipways, so the era of expensive shipping could well last for another Christmas or two
makes more closures likely. But the most significant impact of the pandemic has been to ignite demand for goods from self-isolating shoppers, particularly Americans eager to buy Chinese products using stimulus money. The value of merchandise goods exported from China to America was 5% greater in the first six months of 2021 compared with 2019, before the pandemic. In September and October it was 19% higher than two years earlier.
Apparent signs of improvement are illusory. A widely watched indicator, the armada waiting to offload goods at the twin ports of Los Angeles and Long Beach, America’s main entry points for Chinese imports, now numbers some 30-40 vessels, down from 70-80 in October. However, that is mostly because a recent change to the queuing system means that ships are now asked to wait far out at sea . The real queue is over 100 ships.
Even if spot rates have peaked most customers will face higher bills in 2022. The long-term contracts that govern the bulk of container traffic are currently far lower than spot rates—perhaps $2,500-3,000 perbetween China and America. But as David Kerstens of Jefferies, a bank, points out, spot rates inform contract rates. In 2021 two-thirds of the contracts signed by Maersk, the world’s biggest container-shipping firm, which controls a fifth of the global market, have been long-term ones.
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