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China-US container freight has soared to 20,000 US dollars, how long will it go on for?

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China-US container freight has soared to 20,000 US dollars, how long will it go on for?

August 12
00:18 2021

Shipping stocks bucked the trend and strengthened, with Orient Overseas International rising 3.66%, and Pacific Shipping rose more than 3%. According to Reuters, due to the continuous increase of retailer orders before the arrival of the US shopping season, increasing pressure on the global supply chain, the freight rate of containers from China to the US has risen to a new high of more than US$20,000 per 40-foot box.

The accelerated spread of the Delta mutant virus in several countries has led to a slowdown in the global container turnover rate. The recent typhoon in the southern coastal areas of China also has an impact. Philip Damas, managing director of Drewry, a maritime consulting company, said, “We have not seen this in the shipping industry for more than 30 years. It was estimated that will last until 2022 Chinese Lunar New Year”!

Since May last year, the Drewry Global Container Index has risen 382%. The continued increase in ocean freight rates also means an increase in shipping companies’ profits. The economic recovery on the global demand side, the imbalance of imports and exports, the decline in container turnover efficiency, and the tight container ship capacity, aggravated the problem of container shortages have led to a sharp increase in container freight rates.

The impact of increased freight

According to the big data of the United Nations Food Organization, the global food index has been rising for 12 consecutive months. The transportation of agricultural products and iron ore must also be carried out by sea, and the prices of raw materials continue to rise, which is not a good thing for most companies in the world. And American ports have a large backlog of cargo.

Due to the long training period and the lack of safety in work for seafarers due to the epidemic, there is a serious shortage of new seafarers, and the number of original seafarers has also been greatly reduced. The shortage of seafarers further restricts the release of shipping capacity. For the surge in demand in the North American market, coupled with the rise in global oil prices, inflation in the North American market will further intensify.

Shipping costs are still on the rise

Following the fluctuations in the prices of bulk commodities such as iron ore and steel, the surge in shipping prices this round has also become the focus of attention of all parties. According to industry insiders, on the one hand, freight costs have soared, which has greatly increased the cost of imported goods. On the other hand, freight congestion has lengthened the time period and increased costs in disguise.

So, how long will port congestion and rising shipping prices last?

The agency believes that the order of container turnover in 2020 will be unbalanced, and there will be three stages in which empty container return restrictions, unbalanced import and export, and shortage of containers will increase, which will significantly reduce effective supply. The progressive supply and demand are tight, and the spot freight rate will rise sharply. , European and American demand continues, and high freight rates may continue until the third quarter of 2021.

“The current shipping market price is in a strong cycle of rising range. It is predicted that by the end of 2023, the entire market price may enter the callback range.” Tan Tian said that the shipping market also has a cycle, usually a cycle of 3 to 5 years. Both sides of shipping supply and demand are highly cyclical, and the recovery on the demand side usually drives the supply side’s capacity to enter a growth cycle in two or three years.

Recently, S&P Global Platts Global Executive Editor-in-Chief of Container Shipping Huang Baoying said in an interview with CCTV, “It is expected that container freight rates will continue to rise until the end of this year and will fall back in the first quarter of next year. Therefore, container freight rates will still linger over the years. High.”

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