Global container shipping rates are high, but unsustainable: Fitch
Cargo ships sail in Hong Kong, China. Reuters/file Star Business Desk Star Business Desk
Global container shipping companies performance will be strong in 2021 after a profitable 2020, according to credit rating agency Fitch Ratings.
Spot freight rates will remain high in the short term, which will flow through to contracted rates for 2021. However, we consider the current rates unsustainable in the medium term, as the sector is susceptible to rate volatility and risks of weak economic recovery and trade protectionism, requiring constant prudent capacity management, Fitch said on its website.
A combination of rebounding demand for goods in the second half of 2020, supply chain disruptions - such as container box shortages and port congestion - and more strategic capacity management drove container freight rates up, especially on the routes from China to Europe and
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Jessica Gibbins remembers the moment vividly. It was April 2020, and Melbourneâs long COVID-19 winter was just starting. She and husband James, the owners of pet bedding and accessories business La Doggie Vita, were gathered around their dining table, juggling three young kids and wrestling with an agonising business decision.
Should they go ahead with a big shipment of stock from their Chinese supplier?
There were plenty of reasons to pull out.
Not only was Australia heading for recession, but the exchange rate had dipped as low as US55âµ a few weeks earlier and the sharemarket was in the toilet. Some of the pet retailers they sell into were suddenly nervous about taking in new stock.