October 2019 - announcement IMO2020: clean fuel
The environmental footprint of the industry needs to be reduced. Drastically. The International Maritime Organization therefore announces that ships must reduce their emissions of sulphur oxides by no less than 85 percent from 1 January 2020. Clean fuel, is the message. All shipping companies are faced with the choice: either have their ships sail out with clean fuel (clean, but a lot more expensive than crude oil) from 1 January 2020, or have their ships converted with a 'soot filter' and made clean that way. The latter costs several millions of dollars per ship - and another consequence is that those ships will be out of the water for two or three months. Prices per container in 2020? No matter what else would happen, those prices were bound to increase anyway.

November 2019 - swine fever breaks out in China
As a result, no less than half of all pigs in China have to be destroyed. Where normally the Chinese are self-sufficient when it comes to pork, they are now suddenly forced to import. Massively. Especially from Europe. The large volumes of pork exports to Asia are pushing up prices.
Meat to Asia
Asia is a large destination for reefers, with meat as the largest commodity - especially after swine fever. Therefore, it is the meat exporters from - among others - Europe who set the price, and the rest can't help but follow. The smaller players, such as those of frozen vegetables and French fries, have to dig deeper than ever into their pockets in order to get their goods to the right place.

Drewry Maritime Research

December 2019: corona virus breaks out in Wuhan, China
While Europe unsuspectingly enjoys their Christmas dinner, the coronavirus breaks out in China. By January 2020 the virus is officially identified there for the first time. China shuts down. Big-time. The factories close down, just like the large port terminals. The Chinese lockdown has an immediate impact on maritime logistics. Ships on their way to China can no longer enter the ports. We see one congestion after another. Ships are sent from pillar to post - and not to the port where they actually have to discharge. There is a delay. A lot of delay. Europe is called upon to stop sending ships to China, also because there is no more rotation - hardly any cargo leaves China.

March 2020: Corona/lockdown Europe
The inevitable happens: the corona virus also shuts down Europe - and a little later, the rest of the world. Countries go into lockdown, borders are closed. Consumption worldwide drops. The market collapses.
Reaction carriers
In recent years, the number of global players in the container shipping industry has been seriously reduced. These players have also - operationally - started working together, leaving only three alliances worldwide that dominate container shipping. How do the (largest) alliances respond to the corona crisis? They take capacity out of the market, in order to rebalance supply and demand - and thus keep prices at high levels. Their reasoning: airlines park their planes on the ground, so we take our ships out of the water. As a result, by June 2020 no less than 15 percent (a historic high) of the world's ships were idle - they were suspended (or in the meantime being converted for clean fuel).
The price per container? It increases. Even more.

May 2020: China recovers
In China, the factories are up and running again. Not only thanks to a boost from the government, but also because orders for medical equipment - such as mouth masks and disinfectants - are coming in from all over the world. The demand for computers, screens and headphones is also booming, now that working from home is becoming commonplace. “While other exporting countries were in lockdown, China managed to increase its share of world exports from 20 percent to 25 percent.” (De Tijd, October 2020)

August 2020: Europe is slowly recovering...
... and is therefore about to start exporting again. However, the capacity is still out of balance (also because of the ships that are idle), so the prices remain very high.
Shortage of containers
In addition, this imbalance also causes a shortage of containers, due to the many congestions and the fact that for a while fewer ships sailed back to Europe from China. On the other hand, the United States is now also starting to import massively from China, causing even more containers to go 'the wrong way' (at record prices). Bloomberg reports in April 2020: "Containers are normally constantly being sent back and forth, but that flow has been severely disrupted by the virus. The virus slows down production and cripples demand for some products".
Import and export are never in balance, but the shipping companies normally know how to control it. Now they don't. They can no longer follow. The shipping industry was not prepared for a year like 2020 - they couldn't have been. Containers are everywhere where they wouldn't be in a 'normal' year.
Shortage of empty reefer containers
Reefer containers are also scarce for the same reasons. In addition, due to all the shutdowns and congestion at many large terminals, there is a shortage of reefer plugs. Discharging containers somewhere else? That is possible. But that costs extra.
The cargo supply for reefer shipments has continued to increase steadily in recent years. The large volumes of fruit - especially bananas - that used to be shipped in (old) reefer ships and are now increasingly being transported with reefer containers, have an important share in this. Since shipping companies do not offer specific refrigeration services, the supply and availability of equipment and services depends on more extensive trade flows.

August 2020: allocation restrictions
CMA is the first shipping company that can no longer handle the disturbed demand and takes action. The shipping company indicates that it is 'no longer able to keep up with the reefers'. They put the main shippers on a maximum allocation.
Cyberattack CMA
CMA becomes victim of a cyberattack. Their entire system is shut down. They can't process any more bookings, they can't release any more containers, they don't know which containers are allowed to be released, etc. As one of the main reefer players with a very large share of reefer containers, this automatically has a very big effect on all the smaller players.

October 2020: the fruit season starts
As every year, the season starts from Europe (onions, potatoes, apples, pears, etc.), combined with the preparation for the fruit season of South America. Normally a lot of (empty) containers are sent to those areas. However, with carriers already struggling with equipment problems, plus the increased demand... it just doesn't work.

October/November 2020: doubt in China about whether or not frozen goods are contaminated
China has been strictly monitoring products since the coronavirus outbreak. Despite the strict control, meat products have been imported that are contaminated with the coronavirus. China carries out strict controls on import shipments and intensifies testing on frozen products. This control - fumigating - takes a lot of time. As a result, containers are left standing, they pile up, there are not enough reefer plugs. Ports such as Xingang and Xiamen clog up. Moving to other Chinese ports appears to be an option, but there too they want samples.

November 2020: bookingstops
The availability of empty (reefer) containers is so dramatic that several shipping companies schedule a - temporary - booking stop on various trades. Not only the smaller players, such as Evergreen, Hyundai, OOCL... but also 'big boys' such as Hapag Lloyd, CMA and Maersk are pulling the brakes.
Impact on reefers South America
In the past, reefer containers for export to South America were always guaranteed, considering the importance for shipping companies to have sufficient reefer equipment available in that region (for the worldwide export of fruit and meat). The fact that these days there are no certainties for this trade either, and that there have been a lot of operational problems in recent weeks, with regard to the export to Brazil for example, emphasizes how tense the situation is.

December 2020
The prices per container go through the roof. In comparison - prices 40HC (dry):
China-Europe - in August 2020: USD 1500. Today: USD 6500
China-Brazil - in August 2020: USD 1000. Today: USD 11.000
China-USA - in August 2020: USD 1800. Today: USD 9000
The containers are currently sent to the better paying trade lanes. The transpacific lane is clearly yielding much more at the moment. As a result, there is lower capacity growth from Asia to Europe.
Driver’s seat
It's a fact: the container shipping companies are profiting considerably from the corona crisis. By temporarily suspending ships and cutting service levels, they have ensured that the balance between supply and demand in the container market has shifted to their own advantage: they can negotiate higher rates. The shipping companies are in the driver's seat when it comes to pricing. They have never made so much profit, also because the price of oil is low as a result of the corona crisis. A big difference compared to 2016, when the shipping companies were engaged in such fierce competition that the container rates were completely undercut.
The newspapers are clear: “Shipping lines learn to make money by balancing supply and demand” (Wall Street Journal, 30 August 2020) / “Shippers hold world trade hostage.” (De Tijd, 10 december 2020).
Several countries (USA, China, Korea) are currently asking for measures to be taken against shipping companies that keep capacity at a low level. The EU remains silent for the time being.

2020. It's been quite a year. A lot happened. A lot happened at the same time. And: we're not there yet. Lars Jensen, CEO of Sea Intelligence put it well, in July 2020: "We have never been in a situation before where we have had the container shipping sector so consolidated."
Today's challenge? Getting empty (reefer) equipment from shipping companies and actually being able to ship. In the meantime, all ships are back in transit and all charter vessels have been hired. However, the current demand can still not be dealt with. Moreover, the order book is so small that there will be little or no extra capacity in 2021.


Therefore, for the time being, a lot of volume remains worldwide (including volume that was not there before, such as medical equipment), and the scarcity will remain for now. There will be bidding at higher prices in exchange for space and equipment for at least another six months.
Corona vaccines
In addition, let's not forget the corona vaccines. They are a blessing for the whole world, but not for global logistics. Reefer Trend indicates that it is expected that the vaccines will need no less than 60,000 reefers to be distributed over the next 2-3 years.

JANUARY 2021: Brexit
The rush (now, in December 2020) to get as much cargo as possible in and out of the UK is unseen. Warehouses and terminals are getting overloaded, ships are no longer being discharged, routing needs to be adjusted. The heavy congestion in London Gateway and Felixstowe is causing a spillover effect on the other ports in North West Continent.

It is difficult to predict what will happen in January 2021, what the direct consequences of the hard Brexit will be. Currently (December 2020) there are 5000 customs officers working in the United Kingdom. There are rumours that at least 50.000 customs officers will be needed to manage everything from 1 January 2021 onwards. It cannot be ruled out that the neighbouring countries will also experience enormous inconvenience as a result. Not only operationally, but also economically.

In the coming months, the challenge remains big. Very big. In order to be able to meet this challenge even more effectively, it is important to find the right balance. Together with you. In some areas we can help each other perfectly, so as not to make the situation unnecessarily complicated.
We therefore advise you to keep your volumes as spread out and balanced as possible and to report any peaks to us well in advance (a few weeks in advance).
You can expect us to guide you through this logistical crisis on an operational level - and with the best market conditions. As always.

Warm regards

Shipex Team