No more sky-high freight charges! Two big international shipping giants: the second half of the frei

The global shipping industry is experiencing one of its strongest and most volatile markets ever hit by the coronavirus pandemic and the russia-Ukraine war, but rates are likely to fall significantly in the second half of the year -- a sign from the world's two shipping giants.

Herberot expects supply chain pressures to improve in the second half

That was signalled last week when Hapag-Lloyd, Germany's largest container shipping company, reported first-quarter results. Thanks to high freight rates, the company posted a jump in revenue and profit in the first quarter, even as traffic volumes were roughly flat from a year earlier.

"We have had an exceptionally strong start to the year and, while there are early signs that the market has passed its peak, we expect the second quarter to remain strong," Chief Executive Officer Rolf Habben Jansen said in a news release.

The statement said the global supply chain "continues to face tremendous pressure... The situation is expected to improve in the second half."

In its quarterly financial report, Haberot said a weak global economy and continued supply chain disruptions would slow growth in the shipping industry this year, citing forecasts from shipping consultancy Seabury that global container throughput is expected to rise 2.6 per cent year-on-year, compared with 6.6 per cent last year.

Maersk is also not optimistic about second-half rates

Maersk, the world's largest container-shipping company, sent a similar message.

Announcing its first-quarter earnings, Maersk forecast global container demand growth of between -1% and +1% in 2022, a significant downgrade from its previous forecast range of +2% to 4%.

Søren Skou, maersk's chief executive, said the second quarter was now very similar to the first, but "we see a slowdown in the second half, a return to normalisation... We are seeing increased risk in the economy.

Maersk warned that economic risks, such as the potential threat of stagflation, continued to build up despite its best-ever profit performance in the first quarter due to high freight rates. Meanwhile, consumer and business confidence is falling in Europe and the United States, as are export orders from major manufacturing economies.

The company said its freight volume fell 7% in the first quarter because of supply bottlenecks, but freight rates rose 71% from a year earlier. "There are quite a few factors that suggest we will see slower growth in the second half of this year and next year," Mr Ssolgren added.

It could rebound in the short term

In the first months of the COVID-19 outbreak in 2020, the world's major container shipping lines largely shut down. And when US demand rebounded sharply last year, a sustained squeeze on capacity sent rates soaring until early this year. Spot rates have fallen well below their highs since the start of the year.

In a research note last week, Lee Klaskow, a senior logistics analyst at Bloomberg intelligence, said sea freight rates had fallen 20 per cent from their peak levels over the past 10 weeks as the coronavirus outbreak in China restricted shipments in and out of the country.

"The epidemic in China has put pressure on demand, which has somewhat eased bottlenecks in the supply chain," he wrote. Once COVID-19 restrictions are relaxed in China, cargo traffic is likely to surge, which we believe could boost demand for liner capacity and lead to higher freight rates."

Source: Zhejiang rush comprehensive collation from the financial union, hexun news