By Patrick Burnson, Executive Editor ·
December 20, 2021
Shippers may expect a second year of big increases in 2022 for ocean contract rates, says Philip Damas director and head of the supply chain advisors practice at London-based Drewry.
“Challenges of securing ocean capacity amid current logjams and prospects of hugely inflated ocean freight costs in 2022 are forcing logistics buyers to consider radical options,” he says.
According to Damas, freight rates will not normalize until the systemic market disruptions in container shipping, caused by the pandemic, are reduce significantly.
“The crisis has turned the ocean transportation sector into both a seller’s market and an inefficient, unreliable sector,” he says. “Furthermore, shippers pay much more for a deteriorated service – a change which many logistics managers find hard to explain to their company’s leaders.”
Drewry does not see the planned measures to open the West Coast ports’ gate operations 24-hours-a-day as sufficient to solve the current systemic gridlock. Analysts contend that it will take infrastructure and fleet investments by the public and private sectors, improvements in productivity and possibly programs to attract more truck drivers to the sector – at higher wages – to reduce the backlog of shipments and then solve the container supply chain problems.
“At Drewry, we have told our Beneficial Cargo Owner customers to plan for another year of container supply chain shortages and very elevated ocean rates,” concludes Damas.
December 20, 2021
About the Author
Patrick Burnson, Executive Editor
Mr. Burnson is a widely-published writer and editor specializing in international trade, global logistics, and supply chain management. He is based in San Francisco, where he provides a Pacific Rim perspective on industry trends and forecasts. He may be reached at his downtown office: [email protected]
Subscribe to Supply Chain Management Review Magazine!
Subscribe today. Don’t Miss Out!
Get in-depth coverage from industry experts with proven techniques for cutting supply chain costs and case studies in supply chain best practices.
Start Your Subscription Today!
