Shipping container price surges pose a threat to Global Economy
The pandemic has caused several shocks to global supply chains and brought among other effects, an increase in freight costs for containers from Asia, thus making it harder for small businesses to recover.
There have been problems exporting components and finished products out of China, South Korea, and other countries from East Asia. Many sectors have been affected by the scarcity of containers, the health-care and automotive ones among the most important, and there have been shortages of supplies in consumer goods such as paper towels and smart working gear for employees stuck at home due to widespread lockdowns across the world.
The lack of available containers has promptly boosted a increase in prices, it is forecasted that this year prices will only increase, and while just a few weeks ago the situation seemed more like a momentary phenomenon or a high season peak, now the price surges are regarded as long-lasting and a potential deterrent to the global economic recovery.
Shipping Container Price: the Growth of the Demand for Products
The effects of the pandemic have reached beyond the surge in shipping container price, and are now affecting business operations, stopping the production and causing manufactures to be stuck with unpaid products, and therefore affecting inventory and normal cash flow. Some factories even warned that they will not take up new orders until other issues have been resolved.
One of the biggest problems is the long line for container ships to dock, Bloomberg points out that at least 30 container ships are waiting for their spot in the twin ports near Los Angeles, 2 of the biggest gateways for the US trade. While these ships are stuck outside the harbours waiting for their turn, back in China, suppliers and manufactures are finding it hard to find available containers to export their goods.
According to Maersk, the largest container carrier in the world: “All the ships that can sail are out at sea and all the containers that can hold cargo are in use”, whereas it remains unclear when freight prices will peak. Maersk suggests that current price surges depend largely on lockdowns and economies worldwide placed on stand-by. As soon as countries reopen, consumers are likely to return their previous habits.
What caused the Shipping container price surge?
The shipping container price increase has been caused by a variety of reasons, among which we can highlight the low vessel capacity, the lockdowns and the increased demand for goods by consumers stuck at home.
Currently standard shipping rates for transpacific routes are 4 times higher than in 2020, rates to which surcharges and premium charges for guaranteed loading must be added. For example, while before it was sufficient to pay a modest cost of $2,000 for a container to cross the Pacific Ocean, the same container is now quoted at $13,000 for a delivery before Chinese New Year Celebrations Peak in mid-February.
It is forecasted that the congestion will last throughout the first quarter of 2021, and it might bring long-lasting economic costs that will shrink companies’ margins and weigh on consumer prices. Moreover, due to the backlog in shipments, it is unlikely that the container prices are going to drop after Chinese New Year, as it happened in the past.
Shipping Container price surge: what is the solution?
In order to overcome the surge in shipping prices and to satisfy the growing demand for Asian products and components, Flexport advises the production of at least 500,000 new 20-feet containers.
This extra capacity will be essential to aid small companies, as even European shippers and Freight forwarders have warned the European Commission of possible business failures, unless the problem is addressed, action must be taken to rebalance the shipping market.
How can we help your business?
High freight and containers rates will continue to be a factor for the rest of 2021 and will therefore be influencing your business for the time being.
So how can you find a supplier who will be honest on the shipping timings and will update you on problems or delays?
Simple, choose Yakkyofy.
With us, you will be able to request a quotation for your wholesale products in just a few minutes, and in just 7 days we will send you back a quote inclusive of all costs, such as shipping and destination country clearance.
We only buy products from guaranteed suppliers and provided with all the documents required to pass through customs, we will also perform a AQL Quality Control check before shipping your goods.
We will always get in touch with you should there be any problems or delays with your shipments. Moreover, in our quote you will have a choice of how you want your goods to be shipped, by sea, by train or even by air!
We will provide you with all the information necessary to make your decision, without hidden costs like tax and customs fees.
So what are you waiting for?