According to UNCTAD, maritime trade growth will rebound in 2021 and expand by 4.8% if the world economic output can recover from the pandemic.
So what does that mean for industrial shipping? Depending on if the pandemic is under control in 2021, there could be an increase in rates, policies, and destinations.
Keep reading to find out everything you should expect from industrial shipping in 2021!
Higher Freight Rates
Because the pandemic put such a restriction on shipping, the industrial shipping rates increased. For premium services, they were charging up to $2,000 per container.
Because there won’t be as many vessels taking cargo back and forth in 2021, the rates will continue to increase and become more competitive. In fact, they could even get higher than they were in 2020.
Tight Capacity
One reason that the industrial shipping rates are so high is that there aren’t as many boats available, and the boats that are available are already operating with a limited amount of space.
The capacity issue won’t magically go away once COVID is managed. Capacity is at an all-time high across all modes of shipping: from air freight to ships to trucks.
Because there is such a tight capacity, it’s putting pressure on freight demands and creating even more expensive costs, which puts imbalanced stress on the market. When consumers spend money, they’re creating more freight demand, so with more people going out after COVID is managed, there may be a bigger increase.
You should make sure that you look over your budget and leave some room for higher freight rates. You should also make sure that you invest in pallet scales so that you can measure out only what you actually need to ship to help save yourself some money.
U.S. and China Trade War
When President Biden was elected, the outside world has been waiting to see what he will do with the trade war that Donald Trump had started with China.
Biden said that he would continue this trade war, so depending on this outcome, there could be even more problems and restrictions on industrial shipping in 2021.
Truck Driver Shortage
Another issue that is leading to these problems is that trucking companies can’t find anyone to hire. Going into 2021, there was still a shortage, and the jobs are opening up faster than people can fill them.
COVID has made the driver shortage harder by driving older truckers to retire earlier than anticipated. With all of these people retiring, there aren’t as many people coming in to fill their spot.
Shorter Supply Chains
UNCTAD also recently said that COVID-19 has also made companies realize just how important it is to have global interdependency for each nation. This has caused the industry to rethink globalization and push back against outsourcing.
Because of this, there is also a stronger possibility that the supply chain could shorten. This would also impact nearshoring and reshoring.
Contract Market Uncertainty
Contracting is never 100% for certain, but we know even less about it when going into 2021.
Experts in the industry think that if shippers and carriers agree to raise the contract rate increase, it’ll weaken spot freight activity. However, if it only goes up a little bit, people will start to rely on it because it will be so strong in the market.
People are waiting to see what’s going to happen, so people are doing mini bids for the short-term to see what happens. Because of this, there are larger variations on how shippers will determine their capacity.
Blockchain
Since 2020 forced the shipping industry to become digitized in 2020, many are wondering when blockchain will be implemented. With blockchain becoming more popular, it could develop the shipping industry in a way that no one expected.
Currently, blockchain alliances and cooperation platforms are experimenting with different customs clearance and documents to try and see if it would even work. While it may not be in 2021, blockchain will eventually be a part of the process when it comes to the shipping industry.
Regional Shipping Alliances
While there are three main shipping alliances in the world, more are expected to pop up in 2021. For example, South Korea has recently formed the K Alliance, which is only a regional alliance.
However, it can also help give some motivation to other enterprises to join their own alliance.
Increased Shipping Rates
As with freight rates, the shipping rates are also spiking, especially with USPS, UPS, and FedEx. All three companies have already announced that they’re going to increase rates for 2021.
To help prepare for this, you should try and optimize your shipping program. Check out all your shipping solutions and try to find savings in either carrier contracts, networking, or finding better logistical routes.
You should also take a look into the future when carrier rates will become even more expensive and make room in your budget for increasing costs. You may have to diversify your carrier mix to increase delivery options and also save money while shipping during the holidays.
Learn More About Industrial Shipping in 2021
These are only a few things to consider when trying to figure out industrial shipping in 2021, but there are many more factors that could come into play!
We know that running a business and trying to manage your industrial shipping can be difficult this year, but we’re here to help you out!
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