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Peak Season Container Shipping ‘Chaos’ Ahead, Survey Says

This year’s summer peak season cargo surge will be even more chaotic for global supply chains than in 2021, according to forwarders, traders and shippers surveyed by Container xChange, a marketplace and technology infrastructure provider for container logistics companies.

The “xChange Industry Pulse Survey,” positioned to approximately 200 players from the container logistics industry, found that 51 percent of respondents expect the 2022 iteration of the peak season to be “worse” than last year, while 26 percent predicted it would be less chaotic and 22 percent felt the level of “chaos” to be the same.

The peak container shipping season traditionally occurs in the third quarter of each year as retailers build up inventories ahead of the fourth quarter holiday and shopping season. Last year, cargo surges resulted in record container shipping freight rates, delivery delays, port congestion and reliability of container shipping services.

Looking at container sourcing strategy in 2022 compared to prepandemic times, 56 percent of respondents said they had been “growing networks,” 38 percent said they had agreed to “long-term contracts” and 25 percent said they had followed a “multi-tender strategy.”

On other approaches, 37.5 percent said they were ensuring clients received enough inventory by “shipping early” in 2022, 25 percent were “using alternative shipment routes” and 18.8 percent were contracting long-term slot agreements with carriers. Perhaps surprisingly, 62.5 percent said they were still relying on the spot market or doing nothing specific to ensure shipments reach clients.

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Meanwhile, Covid lockdowns in China are weighing heavily on trade–58 percent of respondents reported they made it “hard to produce/ship as much product as planned,” suggesting that cargo backlogs and unsatisfied demand are building as China’s zero-Covid strategy limits exports to Europe and the U.S., Container xChange said.

“Predicting exactly what will happen in this year’s peak season is harder than normal because there are so many contradictory signs and intangibles,” said Christian Roeloffs, co-founder and CEO of Container xChange. “In terms of the supply of cargo, we’ve seen that Chinese Covid-19 lockdowns have affected the availability of cargo for export to key markets in Europe and North America. One big question is whether China is going to sacrifice its Zero Covid-19 policy to get trade and its economy moving again. If it does, then there’s every sign that we’ll see a substantial surge as backlogs of exports [are] shipped.”

Roeloffs said if lockdown rules are relaxed soon and truckers are allowed to get back to work, then those backlogs will be arriving at the same time as peak season orders, which could cause a lot of supply chain blockages at ports in Europe and the U.S. where congestion is already widespread.

“However, there are very few indicators so far that President Xi is willing to compromise health policy to boost trade,” he said. “Indeed, it might not be politically expedient for him to do so with the Communist Party National Congress set for later this year when he is expected to be endorsed for a third term.”

Roeloffs noted that the other side of this coin is demand: “whether it is GDP forecasts, Purchasing Managers’ Index numbers, rising inflation or consumer confidence, multiple metrics suggest demand could be deflating.” This could help offset any sudden rush of cargo from China, especially when there are also signs that consumers are spending more on services instead of products, he added.

Elsewhere in the survey, top challenges identified by respondents aside from China’s ongoing lockdowns were container availability, depots being full, inflation, the Russia-Ukraine crisis and rising prices.

Headquartered in Hamburg, Germany, Container xChange is a technology company that offers a container trading and leasing platform, payment infrastructure and efficient operating systems to container logistic companies worldwide.