Shipping markets have been thrown into disarray once again, this time being slammed with a double whammy. Just as the Omicron variant began to fade and COVID-19 restrictions eased, the Russian invasion of Ukraine brought about a new wave of disruptions, complicating global shipping markets once again. Additionally, COVID-19 cases have begun ramping up China, specifically in Shanghai where port operations have slowed and created significant backlogs.
While these supply-chain disruptions have previously sent global shipping rates soaring, rates have remained relatively flat in recent months. Global ports, excluding China, have seen the number of ships waiting off the coast decline year-to-date, and a constant rise in inventories could point toward weakening global demand. Supply-chain disruptions are forecast to continue through the end of the year, but the effect on global shipping markets may be more depressed than in prior years.
Related ETF and Stocks: SonicShares Global Shipping ETF (BOAT), Danaos Corporation (DAC), A.P. Møller – Mærsk A/S (AMKBY), COSCO SHIPPING Holdings ADR (CICOY)
Russian Invasion and Shanghai Lockdown Complicates Global Shipping
The global shipping industry is heading into its third-straight year of constant supply-chain struggles, and while disruptions were originally projected to ease throughout the year, the Russian invasion of Ukraine has upended shipping logistics once more.
The three largest container shipping lines, Maersk, CMA CGM and MSC, have completely suspended operations to and from Russia after the country initially invaded Ukraine, which is expected to cause a major decline in shipments if no alternatives are found soon.
Bloomberg reports that Russia imports and exports combined total roughly 3% of the global containerized trade. While that may seem insignificant, Maersk, the world’s second largest container shipper, owns 31% of Russian port operator Global Ports, which is being slammed with restrictions and sanctions.
Swiss-based MSC, the world’s largest shipping company, announced that it has implemented a temporary stoppage of all cargo bookings in and around the Baltics and Black Sea, per Reuters.
According to Business Standard, at the start of the conflict over 100 ships were stranded in the Black Sea, with five of them being struck with missiles resulting in casualties. As full-scale conflict rages on between Russia and Ukraine, global shipping lines are likely to remain extremely cautious about sailing around the area.
Not only has the war in Ukraine disrupted shipping logistics, but COVID-19 disruptions have created significant backlogs once again.
In Shanghai, home to the world’s busiest port for container traffic, a massive outbreak of COVID-19 caused China to enact a city-wide lockdown, causing significant supply disruptions with transport and logistics under severe pressure, Barclays Bank economist Jian Chang stated.
Seko Logistics announced that the disruptions in Shanghai have caused an 80% decrease in container pickups from outside the lockdown area, creating enormous backlogs and slowing ship transfers, per FreightWaves.
These backlogs are not limited to just Shanghai, either. Terminals at the Chinese Port of Ningbo, the world’s busiest in terms of cargo tonnage, are…
To read the complete Intelligence Briefing, current All-Access clients, SIGN IN All-Access clients receive the full-spectrum of MRP’s research, including daily investment insights and unlimited use of our online research archive. For a free trial of MRP’s All-Access membership, or to save 50% on your first year by signing up now, CLICK HERE
To read the complete Intelligence Briefing, current All-Access clients, SIGN IN
All-Access clients receive the full-spectrum of MRP’s research, including daily investment insights and unlimited use of our online research archive. For a free trial of MRP’s All-Access membership, or to save 50% on your first year by signing up now, CLICK HERE