Foreign trade current affairs | Can't afford it! The freight rate is still high and the foreign

Affected by the epidemic, the shipping industry container market has frequent transportation chain problems.

From insufficient transportation capacity to port congestion, extending to the lack of road truck drivers, the connection of various transportation links is not smooth, and it has not been satisfactorily solved so far.

There are various forecasts in the industry as to when ocean freight prices will cool. Liu Dawei, deputy general manager of Changchang Logistics, believes: "The rise in shipping prices is a temporary phenomenon. With the gradual recovery of the supply chain, it will take about three years for prices to return to normal."

Many factors cause high sea freight prices

Looking back at the maritime industry in 2021, the Suez Canal was blocked first in March, then the Yantian Port was severely congested in May, and then in August, the Meishan Terminal in Ningbo Port was closed for two weeks due to the outbreak. The closure of ports in many countries has exacerbated the tension of containers and shipping spaces, and seaborne prices have risen again and again.

In terms of sea freight prices in 2021, the US routes have the highest freight rates.

A freight forwarder revealed: "The third quarter of each year is usually the peak season for shipping. The hot market in 2021 has pushed the shipping price to a peak. Some forwarders have raised the freight rate for China-US routes to $20,000."

Freight rates on European routes have also risen sharply. The freight forwarder said: "The original freight rate for a container to Germany is $3,000, and it will rise to a maximum of $14,000 in 2021."

Freight rates on other routes also rose to varying degrees. Hua Guangyu, CEO of cross-border e-commerce platform Muchen International, said: "Even at the lowest level in 2021, sea freight prices have risen by 30% to 40% compared with last year. The Brazilian route has increased by 10 times."

Regarding the skyrocketing freight rate, some people in the shipping industry analyzed to reporters: "There are many factors in the increase in freight rates. For example, freight forwarders have raised prices, the cost of container and ship loss caused by queuing at the port has increased, and the cost of container handling due to port jumping has increased. The surcharges have increased, and these are the reasons for the surge in freight rates.”

"In addition, in order to alleviate the shortage of containers, some ships pulled empty containers back to China without waiting for loading, which increased the transportation cost, and caused the freight rate to rise when various costs were superimposed." The person added.

Foreign trade companies do everything possible to reduce costs, but still face losses

In the face of rising freight rates, foreign trade companies shouted that they could not afford to transport.

A relevant person in charge of a mobile e-commerce platform said: "After the price of sea freight has risen, we have to adjust the selling price of goods, otherwise we will lose money."

He also revealed: "Most of our goods are shipped abroad by sea, and a very small part is shipped by air and land. If the price of sea transportation does not come down, it will be difficult to break the situation of increasing revenue without increasing profits in the future."

Although some companies choose air freight and European trains, for foreign trade companies, they still prefer shipping.

It is reported that some small foreign trade cargo owners have adopted the method of consolidation and consolidation to save costs, while large cargo owners and agents have thought of the method of chartering ships. However, the high costs brought about by rising freight rates make foreign trade companies face meager profits or even losses.

A board secretary of an A-share listed trading company said: "The most cost-effective way is sea transportation. A single ship can transport tens of thousands of tons of containers. Due to the congestion of overseas ports, the uncertainty of the return time has increased, so we have launched European trains. However, the quantity of goods shipped in this way is limited, and there is no more imported goods to load on the return journey, so the cost of one trip is still relatively high.”

The person also said: "Some orders from Europe and the United States will not increase in price because of the increase in freight rates. Even if we don't accept them, many foreign trade companies in Southeast Asia can accept them. In order to save costs, we can only go to Southeast Asian countries with cheap labor to open factories. Appropriately hedge some of the costs.”

Freight rates skyrocketed, and many countries intervened

In the face of skyrocketing freight rates, many countries have begun to take measures to intervene.

In September 2021, maritime regulators from China, the US and the EU convened a Global Shipping Regulation Summit. FMC Chairman Daniel Maffei talked about "the unusually high operation of ocean freight and container prices" at the meeting.

At the same time, in order to solve the problem of lack of containers and space for foreign trade enterprises, a large number of container enterprises have begun to expand production, and shipping companies have also greatly increased their transportation capacity, and have placed orders for new ships.

According to statistics from Clarksons, from January to October 2021, a total of 110.08 million DWT of new ship orders were traded worldwide, a year-on-year increase of 156.1%.

However, the expansion of containers and ships has also raised concerns among industry insiders about whether the new capacity will cause overcapacity.
A shipping source said: "The port has been in a state of congestion for a long time, and the failure of ship turnover is an important reason for the imbalance in the supply chain of this round of container shipping. once the supply chain is restored, container manufacturers and shipping companies will consider issues such as excess capacity."