The pandemic has wreaked havoc on the transportation infrastructure since the beginning of the pandemic, with extreme disturbance on land (resulting in the disruption of supply chains) and sea shipments.
In the yachting industry, in 2021 new shipyard orders went through the roof in all segments of yachting, particularly in the mid-size and superyacht sectors.
For a good part of 2020 and 2021 many ships were stuck in harbor or on anchor, and couldn’t sail internationally. Goods were piling up in ports and warehouses. When ships started sailing again in small numbers container shipments were up five to seven-fold.
Between 2020 and 2021 domestic shipping rates for moving goods by road and rail in the U.S. were up about 23% and warehousing prices up 14%. Sea shipping went up 75% YOY. (Note: the sea carries more than 80 percent of the world’s traded goods).
Domestic prices in Asia, and especially China barely saw any changes due to a number of specificities. (Very efficient domestic logistics; very advanced network and infrastructures). International shipments prices were dampened by the belt & road rail system that reopened as soon as lockdowns were over.
With the pandemic over, the demand was still far outweighing the capacity of the freight sector, and transportation and logistics providers were still seeking big boosts in prices for contracts in 2022. (Contracts are annual and generally negotiated at the beginning of each year).
Shippers have been trying various ways to keep the transportation inflation at bay, such as consolidating more loads to minimize truck trips and renting truck trailers for storage rather than paying rising warehousing rents. But experts say companies have little choice other than absorbing the cost or passing it along to their customers.
Now it’s 2023 and the costs have kept decreasing since mid-2022 and dropped at the end of the year. They are now back to pre-pandemic level since March 2023.
However the inflation, as well as the rise in oil prices will have lingering effects for quite a while. According to the IMF data from 143 countries over the past 30 years, it appears that shipping costs are an important driver of inflation around the world: when freight rates double, inflation picks up by about 0.7 percentage point. Most importantly, the effects are quite persistent, peaking after a year and lasting up to 18 months.
Luckily shipyards that had full order books have been able to keep production, and are now able to ship yachts worldwide at reasonable rate since the second quarter of this year.
Pandemics and other catastrophic events are not new; what is indeed is the fact that they are now scientifically documented and quantified thanks to information technology. Should we ponder on the impacts and envision emergency plans for the future? Certainly some transportation alternatives exist when it comes to general goods shipped in containers, but when considering yachts, viable solutions are hard to come by.
Disclaimer: Global Marine Business Advisors is a registered legal entity and is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA.