High shipping costs will remain a challenge for the solar sector – pv magazine International

Australia’s solar industry can expect to face high shipping costs and continued supply disruptions for at least a year before a “normalization” of the global ocean freight system.

New data from Dutch multinational financial services company Rabobank shows shipping container shipping costs fell from a record low in September 2021, but are still up to five times higher than in 2019 and the group banking warned that there would be no return to pre-pandemic depressions on the horizon.

Due to Covid-19 related disruptions, international container freight rates have increased significantly since January 2019, reaching a record high price of nearly $10,400 in September 2021. In June 2022, the Global Freight Rate Index amounted to nearly $7,100.

Higher transportation costs and supply chain disruptions are impacting all industries, but solar PV is one of the hardest hit due to the high concentration of solar panel manufacturing in China. High transportation costs and shipping constraints also impact other system components such as trackers, inverters, and batteries.

In his Global Ocean Freight Outlook report, Rabobank says containerized freight prices are expected to continue to gradually decline over the next 12 months from “irrational” highs reached late last year, but not expected to return to pre-pandemic lows .

RaboResearch’s global supply chain analyst Viet Nguyen said shipping container prices are “never” expected to return to pre-pandemic lows of around US$3,000 per container, but predicted that they would decline from the current US$7,000 to US$78,000 per container brand in the coming year.

Global Container Freight Rate Index from January 2019 to June 2022 (in US dollars)

Image: Statista

Nguyen said several global “macro factors” are influencing shipping dynamics and driving the persistently high costs.

As increased inflation and historically low levels of global consumer confidence put downward pressure on ocean tariffs, Nguyen said tariffs were being supported at higher levels by imbalanced global trade flows which are hampering a repositioning profitable empty containers.

“On top of that, geographic uncertainties add risk and there are also rising operational costs for the sector due to higher energy costs and sustainability regulations,” he said.

While shipping rates are expected to drop, Rabobank expects container schedule reliability to also recover, albeit slowly. Port congestion, a major contributor to ongoing supply disruptions, is expected to persist at major ports until the first half of next year.

For Australia, where the solar sector relies heavily on container shipping for modules, “the overall picture is quite positive,” according to Stefan Vogel, RaboResearch’s managing director for Australia and New Zealand.

“While we don’t expect sea freight to return to normal for the industry here until 2024, we believe it will improve for us in Australia and many other parts of the world, but it doesn’t. not happen tomorrow,” he said.

“It will be a year or two where shipping container freight rates tend to slowly decline, while simultaneously reliability improves, step by step, to something closer to normal.”

Vogel said the “bad news” is that containerized ocean freight rates are unlikely to return to pre-pandemic levels, when “they were extremely cheap.” However, further extreme price increases to Q4 2021 highs or above are also not expected.

“The overall picture is quite positive, where we don’t expect to see these rates suddenly explode again or that there will be another massive on-chain disruption,” he said.

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