The cost of shipping goods from China to the US has finally slumped. The chart below shows the spot rate (that is, the rate it costs to take a shipment half-way round the world ASAP) for taking a 40ft container from China to the US West Coast halved between September and October:
Here’s the same chart for the China to East Coast route (data in both instances comes digital freight forwarding company Shifl):
It is, industry bods note, largely the result of Covid-19 outbreaks and power shortages in China. So will prices remain this low?
Shabsie Levy, founder and CEO of Shifl, thinks so, arguing that agents who took advantage of price increases and congestion by buying up capacity are now (perhaps sensing the market has peaked) looking to unload it fast.
“For shippers [somewhat confusingly, a term that refers to exporters and not the shipping lines] with inventory still in China, access to capacity at rates is great news,” Levy says. “But the big question now is whether or not there will be products to fill these containers.”
Levy adds: “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.”
This is still considerably more than pre-pandemic rates. Still, lower prices than we’ve seen over the past 12 months would indeed be good news for the world’s makers. Especially for those smaller firms that have found themselves priced out of a market that has favoured the world’s manufacturing and retail behemoths.
We are not quite as optimistic we’ve seen the end of it, though. Congestion in the US’s busiest port complex, LA and Long Beach, is likely to remain dire for some time yet. And then there’s the demand surge from Christmas to consider.
Rates may edge a little higher than current levels in the coming weeks as retailers in the US and Europe continue their preparations for the holiday season. Though September 2021 may have marked the peak of what has been a spectacular rise in the cost of shipping.
Source: Economy - ft.com
