Maersk sees sea freight at record price level in 2022

On December 8th, the president of the Danish container transport group Maersk for the East Coast of Latin America segment, Julian Thomas, said that the company is renewing customer contracts at a time when sea freight prices are at record levels. The prices rose due to the international logistical crisis which created bottlenecks, container ship shortages, and congestion in ports after the opening and closing of economies since March 2020 due to the Covid-19 pandemic.

He expects logistical problems to continue for most of next year, with a tight capacity to meet growing demand, which should leave prices still at record highs. He also considered it too early to assess the impact of the Omicron variant on the maritime transport sector in 2022.

“The situation will remain difficult next year. Spot prices will vary according to sporadic demand. We are currently renewing contracts with our clients. If freights are outdated, they are being adjusted, and the contracts that are in progress are being fully respected. We have several multi-year contracts that will continue to be respected as always,” said the executive, in a conference call with journalists, adding that demand for containers should remain strong in 2022, with a forecast of 4% growth for global trade.

He mentioned that before the pandemic, a ship made four trips a year between Brazil and Asia on average. Now, this average has dropped to 2 to 2.5 trips per year due to congestion at port terminals and warehouses and the shortage of container ships, among other infrastructure deficiencies exposed by the health crisis and the consequent disruption of the global logistics chain.

Thomas clarified that sea freight prices practiced on the spot market, varying daily, and are adjusted to container supply levels on ships and customer demand. The prices are different from the predetermined values ​​and conditions in long-term contracts, which range from terms of six months to five years, depending on the commercial policy of each shipping company and the routes. “Our strategy is to increase the number of long-term contracts during this period,” he revealed, adding that the company’s Ebitda (cash generation) margin is lower than that of its competitors.

Source: Investing.com

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