It now costs up to six times more to ship a container from China to Europe than it did at the start of 2019. Yet global demand for shipping has increased only by around 5 percent during the COVID-19 pandemic. So what’s causing the spike?
In this video conversation, Steve Saxon, McKinsey’s Shenzhen-based partner leading the Travel, Logistics & Infrastructure Practice in China, and Jaana Remes, a partner with the McKinsey Global Institute, discuss this puzzling phenomenon.
Watch the video to learn more about:
- how changing consumption patterns in the United States are driving up demand for shipping and causing congestion in ports and the surrounding hinterland infrastructure
- how the COVID-19 pandemic has led to port lockdowns and container ships being taken out of service, resulting in an overall reduction in shipping capacity
- why the industry’s response of aggressively adding supply may not be the wisest move
- the longer-term implications of the boom-and-bust cycle of shipping rates and when rates could be expected to normalize