Shipping costs skyrocketed by 300%

Since this week, the US’s busiest Southern California Ports of Los Angeles and Long Beach have intensified congestion. The latest data from the Southern California Maritime Exchange shows that as of this Monday, there are as many as container ships waiting to enter the port. 97 ships are unprecedented in history. Some organizations have calculated that if all the containers loaded on the waiting ship are connected end to end, the total length can reach about 2,200 kilometers, which is equivalent to half of the distance from the east coast to the west coast of the United States. So, what impact will this scale of congestion have? How long will it last?

The Ports of Los Angeles and Long Beach, located in Southern California, are the gateway ports connecting the shipping routes between Asia and the United States. Last year, the ports of Los Angeles and Long Beach handled a total of 8.8 million imported containers, accounting for 40% of the total imported containers in the United States.

However,affected by factors such as the imbalance between supply and demand in the global shipping industry and the weak port operating capacity, the congestion situation in Southern California ports has continued and worsened. At present, there are a total of 97 cargo ships in the two ports, which is twice that of the same period in August. The average arrival time has been extended from 6.2 days in mid-August to the current 8.7 days. Shipping logistics giant Maersk predicts that serious congestion in major global cargo ports will continue at least until the end of this year.

Yanci, President of Maersk (China) Co., Ltd.: The tension in the maritime supply chain is not only reflected in ports, but also related to land transportation. For example, the rail capacity of the port to the inland is insufficient, and the freight truck is insufficient. On the whole, the global shipping logistics market will continue to be tight until at least the end of this year.

The latest data from the "Drewry World Container Index" on the 23rd showed that the freight for a 40-foot standard container from Shanghai to Los Angeles this week was US$10,377, which is approximately RMB 67,000, an increase of 329% over the same period last year. Industry insiders pointed out that the recent soaring is the "spot freight", which does not reflect the overall picture of the global shipping industry.

The "long-term contract freight", which accounts for a larger proportion of orders in the shipping industry, has little fluctuation and has a small impact on the downstream of the supply chain. Maersk’s latest quarterly report shows that the average freight rate for each 40-foot container on its east-west route in the second quarter of this year was US$3,148, a year-on-year increase of 67.5%. The level and increase in freight rates were significantly lower than spot freight rates.

However, the surge in spot freight rates will still cause price increases. As the autumn and winter shopping season approached, a large number of American merchants began to place orders to prepare goods in advance, which put further pressure on the cargo routes from Asia to the United States. Due to rising shipping costs, some US retailers are planning to raise prices, and American consumers will spend more on holidays at the end of this year.