• Ongoing COVID-19 flare-up continues to present challenges across the Asia Pacific
• Container demand growth continued to run ahead of supply growth in Q2 2021
• Increase in net deliveries along with a sharp reversal in idling has pushed up effective capacity in the first half of 2021

Container shipping demand remains strong heading into the fourth quarter. Ongoing COVID-19 flare-up however continues to present challenges across the Asia Pacific says an article on Fresh Plaza.

Challenges across the Asia Pacific

Vietnam extends the lockdown in its manufacturing heartland around Ho Chi Minh City until mid-September, New Zealand imposing national lockdown, and China suspending aircraft operations in Shanghai International Airport. The unprecedented disruption caused by the pandemic coupled with surging demand is affecting schedule reliability at a much lower level than we expect.

Demand growth expected

Container demand growth continued to run ahead of supply growth in Q2 2021. The combination of strong US goods consumption, higher throughput capacity, and re-opening in Europe is expected to drive average year-on-year container demand growth at around 2%-4% for the second half of 2021.

Inventories highest level in June

The global composite purchasing managers’ index hit 56.6 in June 2021 driven by expansion in both the manufacturing and services sectors. The manufacturing orders to inventories index hit the highest level in June since 2010 indicating continued restocking, while the export orders index also climbed to 53.2 in June, the highest since 2010.

Increase in net deliveries

From the supply side, an increase in net deliveries along with a sharp reversal in idling has pushed up effective capacity in the first half of 2021 relative to the first half of 2020. Surges in demand for cargo space keep the fleet active and the global idling container ship fleet remains low. But uncertainties over the easing of capacity constraints, equipment shortages, and port congestions make it challenging to predict when the disruptions and imbalance in demand and supply will normalize.

Schedule reliability

Global schedule reliability has been largely consistent in the past few months, albeit at a much lower level than expected. Schedule reliability has fallen dramatically in 2021 driven by various factors, particularly by stronger-than-expected demand, operational disruptions, and continued port congestions.