Hapag-Lloyd believes that container demand will remain high for the next six months
Excerpted from ShippingWatch.com, January 26, 2021
Uffe Østergaard, president of Hapag-Lloyd America, describes 2020 in the container industry as hectic, surprising and challenging. He expects the demand will remain high for another half year.
Hapag-Lloyd America President Uffe Østergaard projects that the container market will remain strong during the first six months of 2021, following a 2020 that was filled with an unexpected and huge boom in demand.
In contrast to other shipping markets, the container market has seen a boom in demand in 2020.
Østergaard explains that this has resulted in a hectic time for him and his employees and that there has been a lot of pressure on everyone to handle the situation, especially in terms of dealing with bottlenecks and delays – and thus their customers turning their phones red-hot with inquiries about their containers’ whereabouts.
“So that’s unexpected, in the sense that when we started on the Corona journey, in the early part of last year, we thought that the whole shipping business would drop significantly, which it did, but only for a short term. So since the summer, it’s been very hectic, trying to sort of catch up and, and deliver the goods wherever we can,” he says.
The US and, above all, the West Coast has become a symbol of the red-hot container market. As of this week, Østergaard confirms that there are still about 30 container ships anchored off Long Beach waiting for berths.
That number is similar to previous numbers that have been reported during the first weeks of January. On the 12th of this month, congestion at Long Beach counted 31 ships at anchor and 29 at berth, ShippingWatch reported. There were also 18 ships on their way to the port, which were expected to arrive within three days of the 12th.
“For the longest time, I said that I would expect that the market would come down after Chinese New Year. But that does not look to be the case right now. Both because the demand continues to be high in many of the major trades. And also because a lot of the bottlenecks still continue to linger, whether that’s in the terminals, where ships are waiting for days or weeks to get a berth, whether it’s equipment availability or truck availability, which is a big issue in North America.”
He adds that there are still plenty of discussions about additional stimulus plans, meaning more money pumped into societies both in Europe and the US. He believes that this will spur more demand, as people still cannot travel or go out and do activities, such as eating out, like they used to.
“A lot of that money will be sort of channeled into more spending. So, I think we definitely, first half of this year continue to see quite strong demand and continued supply chain challenges. With the delays and additional costs and so forth,” he says.
In addition, it looks like the contracts for 2021 are “starting to follow the common line so that the very low contract rates of 2020 are now being adjusted to the new reality.”
Hectic market, hectic home offices
Despite technology and remote working proving to be useful and a way of working going forward, even past pandemic life, Østergaard says it requires a different approach in communicating compared to when everyone is in the same place.
It puts more pressure on managers to be more proactive in sharing information and also being more active in checking in on everyone’s well-being and status at home.
“Dealing with frustrated customers and still maintaining your morale when you spend many hours listening to customers complaining about where’s my container, where’s my document? Where’s this? Where’s that? Why are you not doing this? Why are you not doing that? While you’re still trying to do your best, but simply because of external issues, you can’t get all the answers in time, that wears people down for sure,” the president for Hapag-Lloyd America says.
According to The Journal of Commerce, one has to wind back time to 2004 to find similar numbers of port congestion.
Østergaard says the company looks to come out of 2020 with a “sizable profit”, which he definitely did not expect at the onset of the pandemic last year.