Manufacturing woes create new headaches for shippers

China-US spot freight rates much decrease

Shippers may finally be getting a respite, as spot freight rates between China and the United States fell in the first week of October. With Chinese firms slashing production owing to the power outage and the off-season approaching, competition for freight capacity in terms of containers and vessel space has cooled, lowering costs by as much as 51.4 percent on some routes.

According to data from digital freight forwarding provider Shifl, the spot fee for shipping a 40-foot container from China to Los Angeles decreased by $9,000, or 51.4 percent, from a high of $17,500 to $8,500 during September and October of this year.

Development of shipping rates from China to Los Angeles.

For China-US East Coast shipping, rates dropped by 28.2 percent in one month, down to $14,000 per container in October from $19,500 in September.

Development of shipping rates from China to the US East Coast.

Is this just a temporary distraction?
However, a mounting backlog of unmet orders may soon overwhelm this brief respite. Chinese energy rationing rules, as well as the impact of COVID-19 shutdowns, are stifling industry output, resulting in late delivery of US and EU manufacturing orders. Inventory shortages and price rises will grow more pronounced as businesses in the United States and Europe rush to diversify their supply chains.

“Before the pandemic, our customers were getting containers shipped for around $1,500,” said Shabsie Levy, Founder, and CEO of Shifl. “Some agents (co loaders) took advantage of the price increases and congestion by buying up capacity, and now they are looking to unload it as quickly as possible,” he added. “For shippers with inventory still in China, access to capacity at lower rates is great news. But the big question now is whether or not there will be products to fill these containers. These rates could go even lower. We’re already seeing long-term rates for shipping 40-foot containers from China to the U.S. go below $5,000,” added Levy. “

Source: Fresh plaza

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