Shipping Capacity Continues To Lag Behind Demand
As the world economy continues its resurgence from the pandemic, U.S. ports remain clogged due to the shock of sudden spikes in demand. After the initial drop in global demand for shipping containers in 2020, Americans shifted spending away from services and more towards durable goods, resulting in a 120% year-over-year shipping volume increase in April 2021 for the Port of Los Angeles.
At the same time, transpacific capacity has failed to keep up with demand, only growing by 32%, while Europe-Asia capacity only saw an increase of 20%. This has resulted in somewhere between 60% and 65% of the world’s cargo ships running about a week late on average. Overall, the cost of standard freight rates has seen a dramatic spike, with an index of global rates showing an increase from $2,000 to more than $5,000 per 40 ft. container.
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