The End of 2020 – a Market Review.

2020 has been dominated by one thing, COVID, changing ways of life right around the globe and disrupting economies on a scale never before seen. 

The Philippines has been affected, like every other global industry. The fundamentals of protecting the wellbeing of the staff have mean production challenges off the back of enhanced distancing measures and tightened hygiene regulations, plus staff absences have meant significant drops in production capacity and inevitable delays.

Right now, there is also a shortage of raw materials for production off the back of the three recent typhoons, so production is focusing on the high-volume core grades, at the expense of other lower demand grades. 

All these factors have pushed up prices from the Philippines and every other country, we forecast that the market prices should not increase much further than current levels, but rather plateau until production delays catch up in the first half of 2021.

We have also seen less affected countries increase exports of lower quality coconut products into the global market. 

Global Shipping 

Currently, there is a global shortage of shipping containers.

Roughly 60% of global goods move by container, and according to United Nations trade data, there are close to 180 million containers worldwide. A lot of these are currently sitting empty, in storage, in the wrong place.

A significant part of this is due to China’s out of sync trade balance as they have been exporting three containers for every one imported in 2020, mainly due to COVID related exports.

Exports from China have surged 21% November 2020 vs November 2019 consisting of appliances, toys, PPE and other items currently in high demand around the world.

Average container turnaround times have increased from 60 days to 100 days because of COVID-19 related handling capacity cuts in Europe and the United States, according to the China Container Industry Association (CCIA), 

The cost of a 40-foot container increased by 142% since June 1, and by 103% to the Mediterranean via the Suez Canal.

And the costs from China to the American East Coast jumped up 85% according to Freightos data in Refinitiv Eikon.

The rates for some shorter South East Asian routes have jumped by even more. The Ningbo Containerised Freight Index from China to Singapore/Malaysia soared nearly 300% between early October and early December due to lack of space.

There are further delays in hub ports like Singapore and Shanghai, meaning containers that are transferring are getting stuck at ports.

Transportation and Shipping in the UK and the EU 

Current port congestion in U.K. ports is much worse than usual years and comes off the back of Pre-Brexit stockpiling and backlogs of containers in port.

There is also a shortage of capacity with hauliers. With delays meaning the usual 45-minute pickup had increased to almost 6 hours from some ports like Felixstowe and Southampton.

Shipping companies are changing ports to less congested ones like Liverpool and are also diverting to European ports, causing even more delays.

The major shipping companies are suggesting that these issues are not going to go away till quarter two at the earliest, and realistically because of COVID restrictions the challenges are going to remain till the vaccines have rolled out.

And we still don’t know what Brexit is going to look like.

In Summary 

2020 has been very tough, and it’s not over yet, prices look to remain high, shipping costs have gone through the roof as we write this article a new article in the Loadster quotes a rate of up to $13,500 from Asia to the U.K. There is a shortage of containers and U.K. based ports, and transportation is stretched to the limit. 

2021 is going to be another challenging year with ongoing delays and high prices.

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