Chinese exporters have been grappling with hefty freight rates this year and expect shipping costs to remain elevated until 2023. A Yiwu-based company owner said he has been struggling to maintain adequate cash flow as his clients cancelled orders due to costly shipping. At the same time, he cannot raise selling prices, fearing losing only customers who are still doing business with him.
According to analysts, the supply disruption is a result of a mismatch between soaring demand and reduced production capacity due to shortages of labour and restrictions related to the COVID-19 pandemic. Reuters reported that 11% of global loaded container volume was stuck in logjams in early November, compared to 7% before the pandemic. Containers are waiting four more weeks in the US West Coast ports, compared to pre-pandemic levels, Danish shipping giant Maersk said.
Hundreds of cargo vessels are waiting to be unloaded as ports sluggishly handle containers due to a lack of workers and truck drivers. The congestion has also driven up shipping costs. Freight rates for China-US trade lanes exceeded $20,000 per FEU in September. While the costs have since declined, they remained two to three times higher than levels seen before the pandemic.
The costs to ship goods from China to Southeast Asia’s major ports in Thailand, Vietnam, Malaysia, and Indonesia have also surged more than tenfold to about $3,000 per FEU. Freight forwarders said they saw orders fall due to higher logistical costs. They added that Southeast Asian ports were currently up to 30% more congested than before the pandemic.
Analysts said building more infrastructure and investing in new technology and digitalisation could help ease the ongoing congestion. However, they warned that new coronavirus variants could send additional shock to port operations and worsen labour shortages.
Tags: All Products,AlwaysFree,Asia Pacific,China,English,NEAPublished on December 21, 2021 2:40 PM (GMT+8)
Last Updated on December 21, 2021 2:40 PM (GMT+8)