Shippers negotiating new contracts this year face a major rates dilemma as the maritime industry contemplates a return to using the Suez Canal.
When carriers revert to transiting the canal, the reduction in voyage tonne-miles will begin to expose the overcapacity in the market, pushing a significant downward trend in freight rates, especially on Asia-Europe trades.
Shipping analyst Drewry estimates rerouting round the Cape of Good Hope reduced effective capacity by around 9%, «which has helped carriers once again post some very strong quarterly profits in the past 12 months».
The coronavirus outbreak exposed the fragility of global supply chains that move goods between countries. Due to the volatility of the logistic market, carriers are facing new risks and the need to promptly respond to changes in order to manage them. The global cargo transportation market is experiencing significant difficulties caused by abrupt decrease of the transport infrastructure throughput due to the coronavirus (COVID-19) pandemic.
The Eurasian landbridge has contributed to increased sustainable connectivity between the EU and China during the decade of the 2010s. Felicitously, this market-driven development preceded, and also complemented, major foreign economic policy announcements by China and the EU and reinforces their goal of increased connectivity. The resulting connectivity is likely to survive any bilateral political debacles because the economic foundation is strong
