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Trans-Atlantic Rates Double Pre-COVID: Global Shipping Industry's Slower Than Expected Recovery Amid



The global shipping industry has faced considerable obstacles since the beginning of the COVID-19 pandemic, particularly in the area of trans-Atlantic container rates. These rates remain at double their pre-pandemic levels, indicating that the recovery process may be more prolonged than initially expected.


Freightwaves recently reported that the Drewry World Container Index (WCI) spot-rate assessment for Rotterdam, Netherlands, to New York showed a value of $5,061 per forty-foot equivalent unit in the week ending Thursday. While this number is down 32% from the peak of last year, it is still 2.5 times higher than the rates observed in March 2019, before the pandemic (Freightwaves, 2023).


Another index, the Harpex index, which measures charter rates across various ship sizes, was at 1,059 points on Friday. This represents a substantial decline of 77% from the all-time high in March 2022. However, the rate of decline has slowed this year, and the index has stabilized in recent weeks. Despite this stabilization, the Harpex index is still more than double its level from February 2019, before the COVID-19 outbreak (Freightwaves, 2023).


One factor contributing to the slower-than-anticipated recovery in the shipping industry is the decrease in cargo traffic. For example, the Port of Oakland reported a drop of 20.9% in cargo traffic in February compared to the same month in the previous year, with only 153,837 TEUs (twenty-foot equivalent units) moving through the port. This decline has been attributed to high domestic inventories and reduced retail sales, which have subsequently led to decreased cargo numbers at US West Coast ports (Informare, 2023).


Regarding the COVID-19 situation, the Centers for Disease Control and Prevention (CDC) stated that the number of daily confirmed COVID-19 hospital admissions is uncertain or predicted to remain stable across all states and territories over the next four weeks (CDC, 2023). Although the requirement for a negative COVID-19 test for air passengers from China, Hong Kong, or Macau was lifted on March 10, 2023 (CDC, 2023), other international travel requirements, such as mask-wearing, proof of vaccination, or testing at the destination, are still being enforced (CDC, 2023).


The stringent COVID-19 control measures put in place by the Chinese government in 2022 had a significant impact on cross-border cargo transport. However, with the downgrading of COVID-19 management measures from Class A to Class B on January 8, 2023, normal travel has resumed, and companies are working hard to recover (HKTDC, 2023).


In conclusion, the shipping industry's challenges, including elevated trans-Atlantic container rates and reduced cargo traffic, have led to a slower-than-expected recovery. As the world continues to adapt to the ongoing pandemic, it remains uncertain how quickly the shipping industry will recover and if rates will return to pre-pandemic levels. As a result, businesses and individuals should keep a close eye on market trends and developments in the shipping industry to make informed decisions in the future.


References:

FreightWaves. (2023). Trans-Atlantic container rates still double pre-COVID levels. https://www.freightwaves.com/news/trans-atlantic-container-rates-still-double-pre-covid-levels

FreightWaves. (2023). Container lines still chartering ships despite demand slump. https://www.freightwaves.com/news/container-lines-still-chartering-ships-despite-demand-slump

Informare.it. (2023). US container ports: decrease in volumes in February. https://www.informare.it/news/review/2023/b280323.asp

Centers for Disease Control and Prevention. (2023). COVID-19 hospitalizations forecasting. https://www.cdc.gov/coronavirus/2019-ncov/science/forecasting/hospitalizations-forecasts.html

TravelAge West. (2023). Cruise lines' COVID vaccinations requirement. https://www.travelagewest.com/Travel/Cruise/Cruise-Lines-COVID-Vaccinations-Requirement

The New York Times. (2023). Tracking coronavirus cases, hospitalizations and deaths. https://www.nytimes.com/interactive/2023/us/covid-cases.html

Centers for Disease Control and Prevention. (2023). Travel requirements for non-U.S. citizen, non-U.S. immigrants. https://www.cdc.gov/coronavirus/2019-ncov/travelers/index.html

U.S. Department of Transportation. (2023). Returning home. https://www.transportation.gov/flyhealthy/returning-home

Centers for Disease Control and Prevention. (2023). International travel during COVID-19. https://www.cdc.gov/coronavirus/2019-ncov/travelers/international-travel-during-covid19.html

HKTDC Research. (2023). COVID-19 impact on cross-border logistics: Update. https://research.hktdc.com/en/article/MTMzMzIzODU1Nw

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