HomeNewsWhen global economy is weak, why are freight rates of China soaring!

When global economy is weak, why are freight rates of China soaring!Posted: 2020-12-17

  • I believe many people are like me. Seeing that the cost of shipping is soaring, are businesses going to make a fortune during the epidemic? Is there any reason behind the soaring price?
    shipping cost

    Shipping prices have gone crazy this year! Take the most popular China-US route as an example. Some insiders disclosed that the shipping price to the US continues to rise sharply. At present, the freight for a 40-foot container costs US$4,000, or even US$5,000, which is two or three times the same period last year, reaching 20%. The highest level in the year.

    Moreover, many routes frequently appear "difficult to find a container". Even if export companies are faced with the pressure of rising freight rates, they can only offer higher prices to obtain tanks. Therefore, it faces considerable pressure on logistics costs. When the capacity is tight, the cabins are frequently dumped, and the shipping companies form an alliance of interests?

    At this time in previous years, the freight rate of container ships from China to the United States has almost ended and the price increase has entered a steady state. But right now, the freight rate of the route has not only risen sharply, but also continues. So why does this happen?
    freight rate

    In addition to its own ships, shipping companies will also choose to lease them. Affected by the epidemic, the major shipping companies are not optimistic about the foreign trade situation this year. At the beginning of the year, they significantly reduced their capacity, especially the trans-Pacific route, where the capacity reduction was most obvious. However, despite the impact of the global epidemic, foreign trade has picked up, and capacity has not recovered in time, resulting in insufficient international capacity, which in turn caused international freight rates to rise.

    This has led to frequent container dumps on popular routes. For the shipping company, the space is pre-sold, and it may pre-sell more space than can be loaded. If the booking volume exceeds the actual loading capacity, the shipping company will choose to discard some spaces. The success of shipping is often determined by the shipping prices of foreign trade companies. The formation of alliances of interests by major shipping companies is also an important reason for the increase in route prices. Some people in the industry said that over the years, the trend of large-scale ships has been serious, and more and more shipping companies have formed alliances. Among them, there are many alliances in the Pacific route between China and the United States. They maintain a tacit agreement on prices, and in special times " "Hanging on" foreign trade enterprises. For example, with the survival of the fittest in the market, the current market has formed three major alliances, namely 2M, Ocean Alliance, and THE Alliance. They pay close attention to and control capacity, and maintain high returns through investment in capacity and regulation of freight rates.
    shipping fee

    However, objectively, the epidemic has also hindered the increase in capacity. Nowadays, the epidemic has not been fully controlled abroad. Many countries lag behind China in resuming work and production. Due to the long unloading time of the other party, cargo ships will be stranded at the port, causing the entire import and export congestion, and the shipping market capacity is even more insufficient.

    Not only the freight rates of China’s exports to the United States have skyrocketed, but the freight rates have also skyrocketed in Europe and Australia, making it difficult to find one cabin:

    The sea freight from China to Europe has risen to more than US$2,000, and it was less than US$1,000 in June this year, which more than doubled. The freight from China to Australia for a container is currently US$3,000, compared to US$600 in August last year, an increase. Up to four times


    Why is there such a shortage of shipping container space recently?

    First of all, the overseas epidemic is severe, the global cargo transportation demand caused by the major blockade measures of countries in the world has drastically reduced, and the global shipping industry has not yet lifted the tide of suspension.

    Secondly, October is the peak season for international shipping and air transportation. Thanksgiving Day in November and Christmas Day in December are grand holidays in Western countries in Europe and the United States. Countries will import a large amount of various materials from China before the holiday.
    freight rates

    The current high freight rates and difficulty in booking space are mainly due to the difficulty of shipping companies to meet the sudden increase in shipping demand.

    Not only the price of ocean shipping has skyrocketed, but the freight rate of air transport has also skyrocketed recently. The peak season for traditional air cargo is generally in April and May and October and November. At present, passenger aircraft capacity has not recovered, and the overall international air capacity is still There is a gap, it is expected that the freight rates of some routes will appear "sky prices"! The high point of 110 yuan per kilogram in the first half of the year may reappear, but the probability is relatively small.
    Air freight

    Due to the high air freight rates in the first half of the year, the freight rates on routes in the United States, Europe and other places are basically similar, which has enabled many logistics companies to achieve good results.

    Air freight prices will be replicated in the first half of the year. International capacity is still tight, and "passenger-to-cargo" continues to help. At present, there are more than 170 domestic all-cargo aircrafts, accounting for less than 5% of all aircrafts. The characteristics of "strong passenger and weak cargo" Obviously, airlines are also accelerating the deployment of freighter scale.

    During the epidemic, China's containers could not get in or out, and there were too many boxes in foreign terminals, but Chinese terminals were eager to find them. Unbalanced capacity has led to an increase in freight rates, so current container shipping companies will generally charge various surcharges.

    In the case of a serious shortage of boxes, if the shipper wants to ensure that the goods are delivered on time, it can only do so by increasing the price. Therefore, if you want to buy an ultra-fine mill, please remember to consult the freight in advance if you are considering buying it in the near future, and consult the shipping schedule and shipping time according to the delivery time, and the customs clearance and unloading at the local port during the epidemic.

    As a professional mine mill manufacturer and exporter, Shanghai Clirik Machinery Co., Ltd. will continue to provide you with the best quality products and services during the epidemic. Welcome to contact us for a full set of quotations including shipping costs.
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