An interview between Jebagro and AMA Freight about the experiences and the progression of the current freight situation.

The AMA Freight Agency GmbH was founded in 1994 and has it`s headquarter in Hamburg. As a medium-sized and owner-managed family business with over 100 emplyees worldwide, the company is represented by its own branches in China, Hong Kong and the Ukraine. In the following interview, we and AMA discussed the experiences and the prograssion of the current freight siutation.

Would you please briefly explain to us which factors have led to the current freight situation?

The current situation is a result of many different factors that have developed into a difficult global situation in logistics over the past 24 months. Due to an economic weaker year in 2019 and, of course, Covid-19, the carriers did not invest enough in equipment, as nobody assumed that the economy in Asia would recover quickly. Since June, the export economy has increased heavily, especially in China. In addition to the scarce shipping space in many places, the general shortage of containers is the main factor. Many problems have been indicated for a long time, but only became visible  with the Covid-19 pandemic. The global logistical cycle is disturbed. This has caused the freight prices on many routes to soar to record highs in the last four to five months. 

Would you please briefly explain to us which factors have led to the current freight situation?  

The current situation is a result of many different factors that have developed into a difficult global situation in logistics over the past 24 months. Due to an economic weaker year in 2019 and, of course, Covid-19, the carriers did not invest enough in equipment, as nobody assumed that the economy in Asia would recover quickly. Since June, the export economy has increased heavily, especially in China. In addition to the scarce shipping space in many places, the general shortage of containers is the main factor. Many problems have been indicated for a long time, but only became visible  with the Covid-19 pandemic. The global logistical cycle is disturbed. This has caused the freight prices on many routes to soar to record highs in the last four to five months. 

In the beginning there were times when we calculated with just under USD 2000,00 per container and in the end, we were quickly billed USD 5000,00. Have you ever experienced similar enormous jumps in price calculations?   

There have always been ups and downs in the past, but the rapid development of the market in the last few months is something we have never experienced to this extent.

As Jebagro, we had to pay almost six-figure freight differences. Do you think that other companies had to accept a comparable or even higher amount, which in turn, led to new difficulties?  

Everybody is affected by the current situation. Even large discounters, which actually have long-term contracts, were no longer served and had to pay higher freight costs in order to obtain space and equipment. In the end, most companies had no choice but to pay the high freight costs so that production chains are not broken or their agreements with customers are not broken. Some companies, especially with a low value of goods, have suspended business because the calculations no longer permitted shipping their goods at this freight rate level.

Do you believe that that the situation might get even worse, or can we expect an easing of the situation?  

In many places, an increase of economic growth is reported, such as in China, Southeast Asia or Europe. However, since the space and equipment problems cannot be solved at the push of a button, these problems will probably keep us busy for some time. We do not expect greater easing before summer.  

Have the shipowners already taken measures to ease the global situation?  

Some shipowners have already announced that they have ordered several thousand new containers. It is questionable whether these sums will be enough to cover current needs. In addition, these containers still have to be produced and delivered. Other measures are taken regularly, but it is doubtful that the shipowners are interested in taking action that will result in any short-term improvement. In the end, the shipowners are the current “winners” of the situation.  

What is your forecast for the rest of the year in regards to this issue? Where could the freight rates level off again? Are we getting back to a level that we had before September 2020?   

The current year will probably remain very difficult. The further development of the Covid-19 pandemic will have a huge impact. Over time, the prices will definitely fall again. But in the coronavirus pandemic, it is not possible to predict a specific period and possible new highs.  

We thank AMA Freight Agency GmbH for the exciting interview!