When we last spoke, I was gently dunking on the ocean freight industry for entering the find-out phase of post-pandemic rate fluidity. Since October, the universe has conspired to pull off a Michael-Jordan-for-three-at-the-buzzer-with-a-fever-in-game-seven-level logistics miracle. Much like the Homelander meme that shows him being applauded by a crowd despite being the antagonist and expecting derision implying he’s gotten away with something, the outbreak of conflict in the Middle East, the drought surrounding the Panama Canal, and the Red Sea attacks by Houthi rebels became a logistics and transportation crisis not quite on par with the pandemic, but serious enough to dig rates out of the mud and send them soaring once again.
Now what? The drop in rates in October caused capacity constrictions, blanked sailings, and other stop-gap measures to prevent the bottoming out of the market. When tensions erupted, and the Suez Canal became a no-go zone, ships began rerouting, clogging voyages with extra ships trying to berth around the Cape of Good Hope. From here, we’ll see an equipment imbalance because the change in flow will bottleneck some boxes at certain ports and leave others with only a few.
I can’t be the only person who worries that the conflict will become big business for logistics as supplies begin taking precedence over capacity. With Lunar New Year on the horizon, I cannot imagine how that will impact the situation. I don’t know if it will impact it at all. China shutting down is a small blip in the global hiccup we’re shouldering.
And the wheel of fortune turns once again. Rates will reach maddening levels, air cargo will go from being only for the most urgent to being for the important as well. We’ll be right back in 2021 with record profits for carriers and maddeningly unhelpful promises of improvements by way of adding more capacity and ordering more ships. So when the conflict clears up and traffic returns to normal, the bottom will again fall out, service will again take a nosedive, and more than likely, another worldwide catastrophe will come along to exploit so we can start the whole process all over again. Again.
Now, we’re hearing the murmurs of an equipment imbalance, adaptation to feeder vessels operating in a spoke-and-wheel formation to restructure capacity, and the screaming pain of shippers who are watching rates hit five figures just weeks after they were almost in the triple. If you want to know what’s coming during and after summer, I’m sure I’ll be back to rant poetic on the fallout from the roulette of modern logistics. Watch this space.
