When Will Tensions in the Global Supply Chain Ease?

When Will Tensions in the Global Supply Chain Ease?

2022-11-25 11:52:30

Since the beginning of this year, the international shipping market has continued to experience tight capacity. However, at the end of September, the high international shipping rates fell, and some foreign trade companies stepped up the pace of shipments. Experts reminded that the fundamentals that led to the shortage of capacity have not changed yet, and it is expected that the shortage of capacity will continue for some time. So, why have the recent international shipping container shipping prices dropped sharply?


1. Reasons of shipping container transport cost drop sharply


"One container is hard to find" is the biggest problem that has plagued foreign trade companies this year. Affected by the epidemic, the container loading efficiency of overseas ports has been reduced, and the substantial increase in the transit time of ocean container transportation has directly pushed up the ocean freight rate. Some merchants reduced or even suspended orders because of factors such as high shipping container transportation costs and difficulty in ordering containers.


It is worth noting that it is the sea freight spot freight that continues to soar and fluctuate. Compared with the shipping secondary freight forwarding market, the freight rate in the primary shipping market has risen relatively steadily this year. Jia Dashan, vice president, and chief economist of the Water Transport Research Institute of the Ministry of Transport, said that having long-term transportation contracts signed directly with shipping companies means that companies have a stronger ability to resist rising shipping container shipping costs. Jia Dashan said that through this substantial increase in freight rates and the availability of transportation, we must have a clear understanding of whether it is in containers or bulk cargo and increase the proportion of long-term contracts.


2. When will the shipping container transport cost decrease?


Since the beginning of this year, the Ministry of Transport, the Ministry of Commerce and other departments have continuously taken measures to promote cooperation between port and shipping enterprises and import and export enterprises, and encourage cargo owners and shipping companies to negotiate and sign long-term ocean container transportation contracts.


The tension of international shipping capacity has been transmitted to other links in the shipping market of various countries and the domestic supply chain system. Jia Dashan said that under the influence of factors such as the continued spread of the epidemic in Southeast Asia, the cost of shipping labor in shipping container transportation costs has also continued to rise. Jia Dashan said: "The cost of seafarers has generally increased by about 10% for senior crew members, but the increase (most) for ordinary crew members is about 80%. The supply side of seafarers has mainly changed from India and the Philippines to China."


Yanci, president of Maersk (China) Co., Ltd., stated at the end of last month that congestion at major freight ports may continue until the end of this year to the beginning of next year, and the entire U.S. freight chain is in a state of tension. From this point of view, whether the congestion of cargo ports in the United States can be improved not only needs to wait for the reduction of goods ordered and transported from China, but also needs to improve the transit efficiency of the entire chain of transportation in the United States, including ports.

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