Container transportation pressure is still severe

According to a Bloomberg report, although the soaring freight rates have brought huge profits to container shipping companies such as Maersk Group and COSCO Shipping Holdings, importers are also facing higher costs that are more difficult to digest. Some companies have raised retail prices, intensifying central banks’ concerns about inflationary pressures, and supply bottlenecks caused by the epidemic are also hindering economic activity.

Bloomberg reported that before the outbreak, most shipping analysts could not imagine that each container from Asia to the United States would be charged $10,000 per container. According to Drewry's data, between 2011 and March 2020, the average freight from Shanghai to Los Angeles was less than $1,800 per container.

 Demand from American consumers and companies is one of the reasons for the surge in freight rates, but the shortage of containers is another reason for tight market supply. Container capacity on the eastbound trans-Pacific route is particularly scarce, and the recent outbreak at Yantian Port in Shenzhen, China has hindered imports and exports. At the same time, the scene of a large number of ships waiting to enter Los Angeles and the Port of Long Beach, the largest ocean-going trade gateway in the United States, shows no signs of dissipating.

Shipping experts said that in the context of Western retailers and manufacturers eager to replenish inventory depleted during the epidemic, multiple links in the supply chain were interrupted, causing delays in ports and inland distribution networks and triggering increases in shipping prices.

Supply chain experts say that rising ocean prices have given many shippers, especially those with relatively low cargo values, a choice: either pay high prices and try to pass the cost on to customers, or withdraw from overseas markets.

 Zhu Guojin, a consultant for logistics company Jizhi Supply Chain Service Yiwu Co., said last month that most of the company's customers, including Amazon's suppliers and some US importers, are paying premium prices, and their demand for goods is very urgent. Zhu said that last year many customers postponed shipments, hoping that the freight would be reduced; but today is different from the past, and most people don't seem to value freight anymore.

Damas predicts that the pressure on container transportation will be "still severe" before the Chinese New Year in early 2022. Chinese factories usually shut down during the Lunar New Year holiday. He said, "It is still not in sight; in the current peak season, the situation cannot be improved. The backlog and delays will only worsen."