As growing store orders ahead of the peak U.S. shopping season put a strain on global supply networks, container shipping prices from China to the United States have reached new highs exceeding $20,000 per 40-foot box.
Global container turnaround rates have decreased due to the acceleration of Delta-variant COVID-19 outbreaks in numerous areas.
Typhoons off China’s bustling southern coast in late July and this week have added to the global transportation crisis gripping everything from gym equipment and furniture to auto components and electronics.
“These factors have transformed global container shipping into a highly disruptive, under-supplied seller’s market, in which shipping firms may charge four to ten times the typical price to carry cargoes,” said Philip Damas, Managing Director of marine consultant Drewry.
(GRAPHIC: Container rates between China and the United States hit a new high of more than $20,000 per ‘box’: )
“We haven’t seen anything like this in shipping in over 30 years,” he added, adding that the “extreme rates” are anticipated to persist until the Chinese New Year in 2022.
RATES ARE GOING UP
According to freight-tracking service Freightos, the spot price per container on the China-US East Coast route – one of the world’s busiest container lanes – has risen over 500 percent from a year earlier to $20,804 this week. On July 27, the price was slightly under $11,000.
According to Freightos’ data, the cost of shipping from China to the west coast of the United States is just under $20,000, while the cost of shipping from China to Europe is nearly $14,000.
The increase followed a recovery in COVID-19 instances in other nations, according to Ding Li, head of China’s port organization, which has slowed turnover at several major international ports to about 7-8 days.
“Ships can only be profitable in trades with higher freight rates, which is why capacity is migrating mostly to the United States,” said Tan Hua Joo, executive consultant at research firm Linerlytica.
According to Damas, several shippers have decreased quantities on less profitable routes including the transatlantic and intra-Asian.
“As a result, interest rates on the latter are rapidly rising.”
The rate increase is the most recent manifestation of the disruptions that have occurred since COVID-19 slammed the brakes on the global economy in early 2020, causing massive shifts in worldwide flows of commodities and healthcare equipment.
“Every time you think you’ve reached equilibrium, something happens that permits shipping lines to raise the price,” said Jason Chiang, Director of Ocean Shipping Consultants, citing the Suez canal blockade in March as a key factor in allowing companies to raise prices.
“There are fresh orders for shipping capacity worth about 20% of present capacity, but they won’t be operational until 2023, so we won’t see any significant rise in supply for another two years,” says the expert.