When Shanghai at some point reopens, the pressure on supply chains will be enormous. CEO of DHL Global Forwarding does not expect freight market normalization before 2023.
“Everybody is a bit concerned over the possibility of a giant wave on the capacity side,” said DHL Global Forwarding’s CEO, Tim Scharwath, at a digital summit Monday. | Photo: Rolf /Ritzau Scanpix
The reopening of Shanghai following weeks of lockdown due to Covid-19 may create a ”tidal wave” in supply chains.
Such is the forecast by Tim Scharwath, CEO of logistics major DHL Global Forwarding.
”There is a gigantic backlog of containers in Shanghai, and there is not sufficient capacity near Shanghai. Everybody is a bit concerned over the possibility of a surge on the capacity side,” said Scharwath, who Monday spoke at a digital summit arranged by DHL Global Forwarding, which is a division of the state-owned German postal and logistics group Deutsche Post DHL.
According to Scharwath, a relatively slow reopening of Shanghai is preferable in order to avoid a big pressure on the market. In the opposite case, ”we can expect a lot of difficulties ahead,” and these may also affect the other end of the supply chain.
”Shanghai is the work bench of the world. The reopening will also affect ports in Europe and the US. They will be very busy,” said the chief exec.
Normalization by 2023
Scharwath expects the situation on the global freight market to somehow normalize in the course of next year.
”In 2023, we will see an easing of the situation, the service of the ocean freight will get better. Less ocean freight will be converted into air freight.”
But this does not mean that the market will look the same as in 2019 – prior to the global pandemic. However, normalization means that services will improve and become more reliable.
”Capacity will be more tight and freight rates will be different than prior to 2019. Right now, one pays high rates, but are not getting service. We need to bring service back,” said Scharwath.
