Streamlining trade, carrier discipline, digitization and a slew of other reforms marked the changing face of the cargo shipping industry, hit hard by Covid-19 pandemic. Latest expert figures indicate a rapidly evolving sea freight service industry, which has been able to regulate prices and ease business. Wondering what sea freight charges and cargo shipping will look like in 2021? Read on…
Sea freight has always been the solution for those who were looking to get their goods from one place to another, especially because it is cheaper than other types of freight. Cargo ships allow transportation of heavy good , sometimes on distant shores that are inaccessible by air travel. Today, sea freight is an important part of international trade that has been growing for many years. It is an economical and convenient mode of transport for freight shipping industry. The rapid development of this sector has led to the development of various kinds of businesses micro-managing services for end to end customer satisfaction.
Much of this industry was affected by the devastating COVID-19 pandemic that continues to wreck people and economies. Severe and harsh border closures have meant delays in trade, ports under lockdown and sea freight services delayed over months. The sea freight services industry suffered in particular due to lack of digitization, carrier consolidations, tariff war and economic turmoil. Yet there has been a resilient navigation towards better times. This article looks at the rapidly evolving sea freight services industry in 2021 and lists the advantages of using sea freight services in 2021.
Stable Freight Cost in the COVID-19 era?
Shipping experts have always predicted on a bright future of sea freight. In 2016, the prices of ocean freight services were down 11%, and the decline was expected to continue, till COVID-19 threw a spanner in the works. But surmounting the odds, sea freight services have been able to align supply with demands, and consolidation and acquisitions have meant efficiency and reduced costs.
According to Fitch Ratings, Global container shipping companies’ performance will be strong in 2021, after a profitable 2020 and even though spot freight rates will remain high in the short term, it will flow through to contracted rates for 2021. That is good news for those wanting to take up cargo shipping from international shores.
Industry experts predict stable freight charges with the expectation that as the economies gradually open up again, sea freight services will be back manifold, and the competition will keep rates at current low levels to aid the final consumer. The falling fuel prices is set to offset some of the immediate impact of lower shipping rates, again helping the end consumer.
Smarter Shipping in 2021
The world of sea freight shipping made a remarkable turn towards adapting technology in 2020. According to Alan Murphy, CEO of Sea- Intelligence, it was the response to the pandemic that changed the face of the industry, which was previously dragging on adapting technology. Applying digital capabilities solved issues of workflow, reduced
human errors and increased productivity, with the end goal of benefitting customers using sea freight services. According to the UNCTAD report, “COVID-19 and Maritime Transport: Impact and Responses”, COVID-19, led the way for digitization of maritime supply chain actions, which included the adaption of cyber security and paperless procedures. The buzz word for 2021 is reliable online remote procedures, improvement in terms of transparency and flexible supply change based on real-time impact, better manpower management systems, and integration of more digitized and paperless workflow, introduction of automation and enhancement of IT capabilities.
What does it mean for those wanting to use sea freight services? When the threat of the virus subsides, with the vaccines out in the market, ports and carries will be trained and upgraded in digital tools, which would have superseded manual processes. Many will want to keep up the momentum, brought on by adapting technology to be ready for any future waves of this virus, or the emergence of the next one.
Reducing carbon footprints
2020 was a turning point for the shipping industry not only in its handling of the COVID-19 crisis but also in embracing cleaner and sustainable fuels. With the International Maritime Organisation (IMO) putting it directives to reduce greenhouse gas emissions and cut down sulphur fuel used in cargo ships, shipping companies have been forced to adapt greener fuels. The IMP 2020 low sulphur fuel usage regulation is a major initiative to address issues of reducing carbon footprints and addressing sustainability.
Using Artificial Intelligence for Tracking
One of the most searched terms on the internet for shippers in 2020 was “tracking”. Transparency and tracking of sea freight is one of the most viable reasons for growth. With the adaption of Artificial Intelligence, smart container tracking, gives both companies and end users predictive insights and assurances to manage their containers effectively (for the former) and assured product delivery. Additionally, IoT devises with sensors can send out real time alerts to notify shippers when their goods are departing or arriving at the port. These features could enhance customer experiences and improve ocean carriers operations resulting in better services in 2021.
Pressure on Air Freight for COVID-19 vaccines and PPE
With a COVID-19 vaccine ramping up for mass production and distribution, shippers must be aware that the air cargo capacity will be consumed by vaccine movements and the movement of any urgent cargo by air next year resulting in more costly and unpredictable air freight. At the other end, the container shipping line industry will take into account the disruptions in supply chain caused in 2020 and will rework capacity management by ascertaining the global demand for each trade lane early in order to support the trade including shippers and ports with optimal freight forwarder pricing.
Year of Re-surgence for the Sea Freight and Cargo Shipping Industry
There are endless possibilities with what has been an invigorating beginning for the cargo shipping industry. There have been peaks and plateaus with the ever changing
face of the virus, which the new vaccines promises to decimate. 2021 promises to be a year of re-emergence and re-hauling of the sea freight and cargo shipping industry.