Dáil Éireann Debate, Tuesday - 29 June 2021
127. Deputy Darren O'Rourke asked the Minister for Transport if his attention has been drawn to the growing cost of cargo shipping to Ireland (details supplied); if his Department has conducted an assessment of this growing cost, the reasons behind it, the future trends and the implications for industry here; the details of this assessment; his plans to address this important issue; and if he will make a statement on the matter. [34765/21]
View answerI am keenly aware of the growing cost of cargo shipping to Ireland. As the Deputy may be aware, this recent rise of shipping costs is a global issue. In the first half of 2021, the volume of goods traded globally has increased significantly. Surging demand coupled with moderate supply growth is the cause of the current upward pressure on shipping charter rates. The surging demand is evident on all major containership routes, particularly on transpacific (North America – Asia) routes. Disruption to supply lines during initial waves of the pandemic has meant that capacity in the containership industry has not kept pace with demand, driving shipping charter rates upward.
Operators in Ireland are likely to have experienced these trends, as they have fed down to smaller vessels in the containership market. Many load-on/load-off (LoLo) twenty foot containers (TEUs) to/from Ireland are fed to/from very large port “hubs” such as Rotterdam, Antwerp and Liverpool. From here, many goods continue to North America and Asia among other destinations.
The Irish Maritime Development Office (IMDO) publishes the Irish Maritime Transport Economist (IMTE) each year. This publication is a statistical bulletin and a comprehensive source of national maritime traffic, trade and global shipping market data. The 2021 edition noted a sizeable fluctuation in shipping charter rates for containership vessels throughout 2020 – the suppressive impact of COVID-19 in the first half of that year, followed by a resurgence in demand for goods in the second half of that year. This highlights the impact that demand for containership vessels has on shipping charter rates.
The IMTE refers to Clarkson's Containership Time Charter Index, which measures the price of moving freight in the containership market, and how this index was at a record high by the end of 2020 and that gains were maintained in early 2021.The IMTE notes that the early resurgence in rates was driven by larger vessels, which was fed down to all vessel classes. I am informed by the IMDO that as of May 2021, the surge in global goods trade has continued, which has led to continued upward pressure on freight rates. The IMTE notes that the market is expected to return to more 'normal' levels as demand for services increases as more economies fully reopen.
Overall, the resurgence in demand has not been met by supply and prices have increased as a result. As economies open up again, and this demand is alleviated, it is anticipated that the market will return to more normal levels but any associated timeline for this remains uncertain.
