That wasnt a happy situation for everyone. The shipping industry depicts this period from roughly 2015 to early last year as lean times, in which profits were squeezed to virtually nil.
We recently have seen a very long period where the industry didnt make any money whatsoever, says David Kerstens, a shipping analyst at Jefferies. From around 2014 or 2015, the average profitability in the container shipping industry has been at around zero.
Freight has always had extra costs attached, but with businesses at their mercy, shipping companies have even begun treating shipping itself as a premium service. Rolling in which a container is not loaded onto the vessel it was supposed to sail on is commonplace, with shipping companies apparently willing to leave clients in the lurch if someone comes along with a better offer, a practice similar to gazumping in the housing market.
Because companies simply buy container space, the situation is more acute for businesses that sell cheap or large goods or worse, both. Hookham says this is proving particularly painful for some African exporters who sell large quantities of cheap commodities. Theyre just getting screwed, he says. Its as simple as that.
No change on the horizon
Economists expect sky-high spot rates to hold for the rest of the year, and perhaps only dipping once Chinas Lunar New Year and the factory shutdowns usually associated with the national holiday has passed, in February. Its gonna get worse before it gets better, says Buchman.
Some companies simply dont have that long to wait, and will soon be scrambling to reorganise supply chains and shield themselves from the next shipping shock.
But with China so dominant in global goods production, it might not be enough to produce a true sea change. When procurement teams look out into the world, the manufacturing powerhouses charms may be irresistible.