Over the last couple of months, ocean freight has been facing unforeseen port congestion and vessel delays worldwide. Higher rates, tight capacity, lack of containers, accidents, and the deterioration of schedule reliability are some of the major issues the sea freight industry has been experiencing since the outbreak of COVID-19. Moreover, the severe lack of vessels has also been forcing carriers to make blank sailings at a time when these sailings could be generating record revenues from the recovery of the Chinese economy.

Port congestion, along with COVID-19 related workforce constraints, has led to massive delays as a high number of vessels continue to wait at anchorage to berth. The real cost of such congestion for carriers is the loss of revenue from sailings that have to be canceled, but the blanking of sailings also reduces the possibility to reposition empty containers back to China on the backhaul voyages. In response to the persistent strong cargo demand, most carriers have been deploying additional vessels as well, leading to infrastructure challenges in many ports, particularly ones on the West Coast. This area is, in fact, the worst hit as it has been receiving unprecedented volumes of imports.

Due to these bottlenecks with ocean freight, air freight demand has increased significantly across the globe. As a result, ocean carriers are becoming increasingly confident that freight rates will remain high for years and are still chartering ships for lengthy periods at elevated daily hire rates last seen 16 years ago.

Aside from the gigantic increase in basic shipping rates, there is also the emergence of all of these empty container surcharges, chassis deficit surcharges, and fuel surcharges, which will likely rise again now that oil prices are recovering. And in due course, carbon pricing will be included in European-origin shipping rates as well.

Adding to all that, the recent Suez Canal blockade, which involved a container ship called the Ever Given getting stuck and blocking one of the world's busiest trade routes between Asia and Europe, will most definitely cause further congestion and economic fallout, significantly disrupting the global shipping industry.

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