SIMIC

Production across much of China remained open after the February 12 start of Chinese New Year, in part to clear order backlogs that have built through months of heavy demand. The volume has outstripped all available container-shipping capacity despite carriers deploying as many vessels as they can find, preventing rates on the Asia-North Europe trade from declining in line with historical patterns.

By February 28, two weeks after the Lunar New Year began, the spot rate stood at US$4,458 per TEU, according to rate benchmarking platform Xeneta, down just 2 per cent from February 5. Last year, Chinese New Year began on January 25, and two weeks later the rate had fallen 15 per cent to $948 per TEU. It was a similar picture in 2019 when Chinese New Year started on February 9. Two weeks after that, the rate had fallen by 9.2 per cent to $915 per TEU.

The 2020 and 2019 rates are almost 500 per cent below current levels, according to Xeneta's historical data, amid the widespread and ongoing disruption to the global supply chain wrought by the coronavirus disease 2019 (Covid-19).

Carrier executives say there is no sign of the demand slowing through the first half of 2021, and strong bookings has led Hapag-Lloyd to even impose an $875 per TEU peak season surcharge from March 1, reports IHS Media.

Rolf Habben Jansen, CEO of Hapag-Lloyd, told the virtual TPM21 conference early this week that bookings after Chinese New Year were picking up this year much quicker than they normally do, and there would be no let-up anytime soon.

"Looking at the inventory ratios in both the US and Europe, I think there is still a lot of restocking to be done," he said. "So I think it will still take two or three quarters before we get back to some kind of normalcy."

Every available vessel has been deployed to handle the sustained demand on the major trades out of Asia, but carriers are being forced to cancel sailings because of port congestion, and not as a result of demand slowing after Chinese New Year.

"We are not blanking any sailings," Mr Habben Jansen said. "Sometimes we have to strike a voyage because the ship doesn't return on time. For example, in LA-Long Beach we have more ships at anchor than at berth and it takes longer for those ships to get back to Asia."