In late May this year, the transportation cost of a container from Shanghai to Rotterdam exceeded the US$10,000 mark. Drewry data shows that shipping costs this week have reached US$12,795, a nearly 600% increase year-on-year. It costs nearly US$10,000 to ship a container from China to the United States, and prices have increased by 229% in a year.
The Drewry World Container Index released last Thursday showed that the spot price of a 40-foot container from Shanghai to Los Angeles rose to US$9,631, higher than the previous It rose 5% in the week and soared 229% year-on-year. The composite index reflecting eight major trade routes rose to US$8,796, a year-on-year increase of 333%.
Drury said freight rates are expected to rise further in the coming week.
The global freight index from Drewry Shipping Consultants, a London-based consultancy, shows that as of July 1, the global average freight rate for 40-foot containers was more than four times the level of the same period last year, reaching $8,399. Since the first week of May, the index has soared 53.5%.
According to Drewry’s freight reference, the listed freight rate from China to major ports in Europe and the US West Coast is close to US$12,000/container, and some companies claim that in order to deliver goods to outbound vessels, They agreed on a last-minute freight rate as high as $20,000.
The “Wall Street Journal” reported that Brian Bourke, chief growth officer of Seko Logistics, a freight forwarding company headquartered in Itasca, Illinois, said, “Global trade is like the hottest thing right now. restaurant. If you want to reserve a cabin, you need to plan two months in advance. Everyone is trying to grab the cabin they can get, but it is actually difficult to get a cabin.”
The backlog and delays will only worsen
Container shipping pressure remains severe
According to Bloomberg, although soaring freight rates have brought huge profits to container shipping companies such as Maersk Group and COSCO Shipping Holdings , but importers also face high costs that are harder to absorb. Some companies have raised retail prices, exacerbating central bankers’ concerns about inflationary pressures, while supply bottlenecks caused by the epidemic are also hampering economic activity.
Bloomberg reported that before the outbreak, most shipping analysts would never have imagined that each container on the route from Asia to the United States would charge US$10,000. Drewry data shows that between 2011 and March 2020, the average freight rate from Shanghai to Los Angeles was less than $1,800 per container.
Demand from U.S. consumers and businesses is one reason for soaring freight rates, but a shortage of containers is another reason for tight market supply. Container capacity is particularly scarce on the eastbound trans-Pacific route, with a recent outbreak at Yantian Port in Shenzhen, China, hampering imports and exports. Meanwhile, the scene of large numbers of ships waiting to enter the ports of Los Angeles and Long Beach, the largest U.S. ocean trade gateways, shows no signs of abating.
Shipping experts say disruptions at multiple points in the supply chain have led to disruptions at ports and inland distribution, as Western retailers and manufacturers rush to replenish inventories depleted during the pandemic. Network delays caused increases in shipping prices.
Rising ocean shipping prices have left many shippers, especially those with relatively low-value cargo, facing a choice: Pay high prices and try to pass the costs on to customers, supply chain experts say , or withdraw from overseas markets.
Zhu Guojin, a consultant at logistics company Jizhi Supply Chain Service Yiwu Co., said last month that most of the company’s customers, including suppliers to Amazon.com Inc. (Amazon.com) and some U.S. importers. After paying a premium, their demand for the goods is urgent. Zhu said that many customers postponed shipments last year in the hope that shipping costs would come down; but today, unlike in the past, most people no longer seem to value shipping costs.
Damas predicts that pressure on container shipping will “remain severe” before the Lunar New Year in early 2022. Chinese factories typically shut down during the Lunar New Year holiday. “There is no end in sight; the situation is unlikely to improve during this peak season. The backlog and delays will only worsen.”
Losing money when exporting
Some textile foreign traders have received orders from customers to stop shipments
Freight is rarely taken seriously by buyers and sellers in the textile trade process. When air freight is not involved, this cost is almost negligible. Before 2020, the price of shipping a container to the UK was US$2,500, but now the price is quoted at US$14,000, an increase of more than five times. Now it is difficult for any trader to ignore this part of the cost. With freight prices soaring, people engaged in textile foreign trade are also suffering from it. They lamented, “I have never seen such a high price in ten years of business! This business is out of business!”
“I’m almost worried to death. The sea freight for one trip costs over 200,000 yuan, which is too high. Moreover, the shipping company hasn’t delivered the goods yet. It keeps saying that it will take two days or two days.” Vinings Textile (Suzhou) Co., Ltd. Li Yu (pseudonym) told reporters that the company mainly exports anti-epidemic materials and other textile products to Spain. Since 2020, the order situation has been good and the performance is very impressive.
Li Yu said that the company was not too busy in the first quarter of this year and the gross profit margin was also good, but from now onSince April, the company has become busier and busier, but due to the surge in shipping costs and the appreciation of the RMB, the company’s profits have dropped by half compared to the same period last year.
In this regard, the above-mentioned industry insiders said that textile export companies faced three major difficulties in the second quarter of this year: rising sea freight, rising exchange rates and continued rise in commodity prices.
“The surge in shipping rates is due to the outbreak of foreign epidemics, especially in India, which has greatly affected the global supply chain. Pushing the supply chain upward will affect the imbalance of global shipping. , causing the freight rates of domestic ocean routes to soar. However, due to the epidemic, other countries may have many containers piled up at the port and can be shipped quickly, so their ocean freight is relatively low.” An industry insider gave an example. , the freight cost of a container has increased from US$5,000 to US$10,000, while the entire container may only be worth US$30,000, with freight accounting for more than a quarter. “This has resulted in the competitiveness of some products with relatively low profit margins. Products from other countries are no longer competitive, so there is no need to export, because exporting will result in loss of money.”
Currently, it is understood that many foreign trade companies have received news that customers have stopped shipping due to high sea freight. In the future, costs will continue to rise and profits will be squeezed again and again. !
Sea freight has become an obstacle to the recovery of foreign trade market
Traders feel that the off-season is coming
However, the textile foreign trade market has become loose recently, and orders received in the early stage have been tepid, with little improvement. Recently, there have been reports of improvement. News, orders began to increase. However, today’s sky-high sea freight has invisibly increased cost pressure on foreign trade textile companies, forcing them to raise their quotations. However, it is also easy to lose orders due to high prices.
Sea freight has become an obstacle to the recovery of foreign trade. Especially in the second half of the year, we are about to usher in the important traditional peak season “Golden Nine and Silver Ten”. On the one hand, judging from the past peak season prices, the prices of raw materials, gray fabrics, dyeing fees, etc. are likely to rise. Coupled with high sea freight, the costs of foreign trade textile companies will further increase, which is very unfavorable for them to receive orders. On the other hand, it is currently the traditional off-season for the textile industry, with relatively few orders, and there may still be plenty of time for shipments. However, in the peak season in the second half of the year, once orders increase and the shipping situation has not been alleviated, shipments will definitely become more difficult, and there may even be problems such as transaction delays and the need for compensation.
From a recent perspective, the editor is not optimistic that the market will continue to rise, especially in the near future. In the absence of support from downstream orders, price increases can only be temporary. , from a long-term perspective, it is difficult for upstream raw materials to have such a violent rise again. Not only traders feel the arrival of the off-season, but weaving companies also begin to feel that the market is slowing down.
The market is sluggish and demand is bound to weaken. The downstream stockpiling of goods in the early stage of buying up but not down has left its raw material inventory for about a week longer. Under the influence of the dual demand reduction, weaving manufacturers’ demand for raw materials has also been weakening, supply pressure has eased, and price increases have lost support. </p
