In the full year of 2020, global container shipping volumes fell by 1.2% compared with 2019, much less than feared even before the pandemic was first declared, and much recovered compared with the 6.8% drop recorded in the first six months of the year. Volumes in the second half of the year were up 4.2% from 2019. Much of this growth was concentrated on just a few trade lanes, with congestion and imbalances on these spilling out and causing disruption on other trades.
BIMCO expects that 2021 will be even better for container shipping than 2020, as the current backlog will take months to clear and carriers are using the current strength of the market to lock in long-term contract rates for the coming 12 months at higher levels than in 2020.
By far the largest volume growth was seen on the Far East to North America trade. On this route, volumes rose by 3.6m TEU in the second half of the year compared with the first, while volumes rose 2.1m TEU compared with the second half of 2019, enough to bring full year growth into positive (+1.4m TEU). The second half growth caused major disruptions in many U.S. West Coast ports, as they were unable to keep up with record high volumes while implementing social distancing among workers at the same time, due to the pandemic. Furthermore, lower manufacturing and containerized exports in H1 2020 meant that the imbalance on the trade got even worse, leading to equipment shortages as containers were stuck in the wrong places.
Weaker H2 recovery on the other major trades
Of the three most important, high-volume trades, the Far-East to North America was the only one to grow over the full year, as growth on intra-Asian and Far East to Europe trades in the second half of the year was not enough to make up for H1 losses. After falling by 1.1m TEU in the first half of the year, volumes between the Far East and Europe were only up by 0.2m TEU in the second half of 2020, leaving full year volumes on this trade down 5.2% compared with 2019.
On the Intra-Asian trades, a 2.2% growth in the second half of the year compared to H2 2019, was not enough to recover a 4.0% loss in the first half.
There were only very few trades which bucked the trend and grew in the first half of the year. One of them was the Indian subcontinent and Middle East exports to the Far East; the thirteenth largest trade which saw volumes increase by 115,000 TEU in H1 2020 compared to the same period in 2019.
“The particularly strong recovery in demand for containerized goods in the U.S. was driven by a rise in consumer spending, particularly on goods for the homes that people have been spending much more time in, as well as higher spending on goods as consumers were unable to spend what they usually do on services,” says Peter Sand, BIMCO’s Chief Shipping Analyst.
“As manufacturing in consuming countries has struggled to recover to its pre-pandemic levels, imports have outgrown demand for a number of goods in order to fill the gap. This development is hugely beneficial for shipping.”
Uptick in volumes soon played out on spot freight rates
Freight rates did not experience the same drop as volumes did in the first half of the year, as carriers pushed losses onto tonnage providers. Charter rates did however fall steeply from mid-February to June.
On the routes from the Far East towards the U.S. and Europe, only spot rates to Europe fell over the course of the first half of the year, bottoming out in April at just under $1,639 per TEU, which was still higher than rates in much of 2019.
Once volumes started to rise, rates followed the upwards journey that would take them to the record high levels which carriers are still enjoying today. The first increase in spot rates was seen on the Far East to U.S. West Coast trade, as this was where the uptick in volumes happened first and fastest. As the scale of the recovery on this trade was uncovered and the idle fleet nose-dived as carriers added capacity to meet rising demand across the board, rates on other routes also started rising, first on Far East to the U.S. East Coast, and then a couple of months later, a sudden jump in rates to Europe followed.