What’s going on with shipping rates?

| Video

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

In addition, to learn more about the lasting effects of the COVID-19 pandemic on consumer spending, download our report The consumer demand recovery and lasting effects of COVID-19.