The Surge in Global Demand Push Containers Rate High: Shipping Companies

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Due to shoring raw material prices, the input costs for wood panel products manufacturing is continuously increasing. The much talked reason for the price rise is high fright rate for shipping containers and a constraint availability of raw materials at local level. The constraint availability of container at ports is another reason for non availability of raw materials which are made available from imports.

It is posing challenges before manufacturers and they are bound to purchase the available stock at higher price. With rising input costs Laminate, Plywood, PVC Boards, Furniture manufacturing becomes a costly affair. On the other hand the inputs coming from the shipping companies indicate that rebound in the global trade in the third quarter compelled them to stretch their capacity and price surge by 300%.

Maersk - the world’s largest container shipping firm CEO Soren Skou told CNBC that Maersk marginally beat fourth-quarter profit expectations and posted an upbeat outlook for 2021 after an “exceptional while challenging quarter.” Skou explained that after a 15% dip in Maersk’s volumes in the second quarter of 2020, the sharp rebound toward the end of the year, particularly in the U.S. and Europe, saw global trade return to a 5% year-on-year increase. That has caused a significant bottleneck in terms of lack of capacity and lack of containers, which have driven freight rates higher,” Skou said.

After removing capacity during the second quarter demand slump, Skou told CNBC that Maersk and other carriers now have their full container capacity deployed once again. “So we are trying to deal with a surge in demand which is completely unprecedented, both a surge in demand because the consumers are spending, but also a surge in demand because a large restocking started, as large retailers actually stopped buying stuff in Asia in the second quarter of 2020 and well into the summer,” he said

 

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