Price hike! Freight rates continue to rise in August, and delivery delays

There is another situation with cross-border logistics!

The UPS strike has been making a lot of noise recently . The two parties have reached a preliminary agreement, but the "delays" in last-mile delivery are still there, and there may be another wave of price increases. Since some FBA warehouses are also experiencing warehouse overflows, the time it takes for sellers to put their goods on the shelves has been extended.

At the same time, new price increase rules of CMA CGM and other shipping companies will also take effect one after another. In addition to the peak season surcharge, freight rates to Europe and the United States will increase in August. It is also worth noting that as Typhoon Dusurui approaches, many cross-border companies have said that they will take a holiday today, and many ports have issued notices to stop accepting container delivery services at the gate.

Last-mile delivery: Rising truck costs and delayed delivery times

The latest developments in the UPS workers' strike are here.

The temporary wage increase agreement includes wage increases, enhanced workplace safety measures, and an end to overtime requirements on rest days during the five-year contract. The new contract will be approved by 340,000 fleet workers, with voting expected to end on August 22.

In the view of many industry insiders, there is little chance of a reversal in this matter, which means that the UPS workers' strike crisis has been basically resolved. Although the crisis of large-scale delays in last-mile delivery may have been avoided, the goods will most likely face the pressure of an overall price increase in the last-mile delivery costs.

According to estimates, the new contract will cost UPS an additional $30 billion. This cost will most likely be borne by the shippers. Some experts say that UPS's annual comprehensive rate (GRI) will increase by at least 8% in 2024, and competitor FedEx may also follow suit.

Even if the UPS strike crisis is initially resolved and UPS can operate normally, the delivery time of goods after they arrive at the port will be accelerated. However, due to factors such as the previous assembly and demonstration , the delivery time of goods through the UPS channel has indeed been delayed to a certain extent.

A freight forwarder said, "UPS has accumulated a lot of goods during the previous strike. It will take some time to clear these remaining goods. Conservatively estimated to be about half a month, UPS's delivery time will not return to normal immediately. Affected by this, many warehouses of one-piece delivery are overwhelmed, and transshipment warehouses will be delayed. "

In addition to delays in cargo delivery, transportation costs are also rising in the short term.

"The previous strike caused a lot of goods to be piled up, which led to an increase in freight rates in the short term." People familiar with the matter said that the last-mile delivery is carried out by express delivery and trucks. The strike on one side has caused the other side's resources to be tight, and cost increases are inevitable. In addition, due to the problem of water leakage accounts recently, UPS has closed many overseas warehouses, resulting in a decrease in the number of overseas warehouses and an increase in cargo volume, which has more or less affected the final delivery costs.

Prices to Europe and the United States will increase in August ! Many shipping companies have issued notices

Shipping costs have also been rising recently!

Freight rates to the US have increased to varying degrees. In detail, the ocean freight from Shanghai to Los Angeles Port in the west of the US has once again recorded a weekly increase of 10%, with the freight rate climbing to US$1,965/FEU, approaching the US$2,000 mark! The freight rate from Shanghai to New York Port in the east of the US has increased by 7% to US$2,906/FEU .

"The volume of cargo received has indeed increased recently, but the change is not obvious. Therefore, the reason for the increase in freight rates is not closely related to the increase in the volume of cargo received. It is mainly because the shipping companies have reduced their ships, resulting in a shortage of shipping capacity, which has led to an increase in freight rates. To put it bluntly, the shipping companies have artificially created a shortage in order to achieve the purpose of raising prices." According to feedback from many freight forwarders, the EMC HTW route and the TPA route were still suspended alternately in August, and the space was still tight. The shipping price continued to rise, and the cost of shipping was higher.

Data shows that Maersk is the shipping company that has cut the most capacity this year. It has cut capacity by 2.1% by selling ships or terminating charter contracts, exceeding the 1.4% capacity cut by Maersk in the whole of last year.

Export shipments continued to be sluggish. Some shipping companies found various reasons to postpone shipping dates because they did not receive and load enough cargo and the profits of single-shipment containers did not meet expectations.

An industry insider explained that freight rates continue to be sluggish, and mainstream shipping companies do not want to repeat the wave of shipping company bankruptcies in 2015. They have adjusted their capacity and controlled warehouses to maintain prices . Controlling warehouses and maintaining prices is not only a short-term behavior of shipping companies , but is also most likely a necessary means to maintain long-term profits .

The data shows that in the main east-west head-leg trade: between Week 30 (July 23 to July 30) and Week 34 (August 21 to August 27), the total number of flights originally planned was 663, but now there are cancellations to varying degrees, of which 50% of the empty flights will occur on the eastbound trans-Pacific routes, 33% on the Asia-Northern Europe and Mediterranean routes, and 17% on the westbound trans-Atlantic routes.

There will be another wave of logistics price increases in early August . Currently, many freight forwarders have issued notices that Europe, the Mediterranean, Australia and other routes have launched price increase notices. In August , shipping companies on European and American routes continued to increase prices, North American warehouses continued to be tight, and ocean freight rates will continue to rise ↓↓↓

Starting from July 31 , Maersk will increase the FAK rate (Freight All Kinds) on the Far East -Europe route .

Starting from August 1 , MSC will adjust the FAK rates for routes exporting from Asia to Europe and North Africa .

Starting from August 1 , CMA CGM will significantly increase FAK shipping rates on the Asia-North Europe route .

Starting from August 1 , South Korean shipping company HMM will adjust the FAK rate from the Far East to Northern Europe .

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In addition, the peak season surcharges of companies such as MSC and HMM are also approaching. MSC stated that it will impose a peak season surcharge on goods exported from Asia to the United States and Canada from August 21, 2023.

FBA warehouse explosion! Typhoon "Dusurui" is approaching, and the terminal stops accepting gate delivery and pick-up services

It is also worth noting that with the arrival of Typhoon Dusurui, ports such as Shenzhen, Guangzhou, Hong Kong, Ningbo, Xiamen and Shantou will be affected to varying degrees. Many terminals have issued notices to stop accepting container delivery services at the gates, and the resumption of operations will be notified separately.

With the arrival of the typhoon, some cross-border companies have announced that they will suspend work today. Some companies require their employees to take subsequent leave, while others do not.

Recently, the FBA warehouse explosion problem has also been mentioned by many sellers:

I heard that GYR3 and GYR2 have been closed due to hot weather?

ONT8 warehouse has received the products for 10 days, but none of them have been put on the shelves.

The same ONT8 was signed for at the delivery warehouse on June 27, but it has not been registered or put on the shelf yet.

FWA4 warehouse signed for the goods on June 28, and some of the goods were not put on the shelves.

The VGT2 warehouse has made an appointment for delivery on July 19, and the freight forwarder has also provided a POD, but the goods have not yet been put into the warehouse and put on the shelves.

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Judging from the feedback from sellers, GYR3 and GYR2 have just ended their closure, and warehouses such as ONT8 are slow in receiving and putting goods on the shelves. Someone sent 200 pieces of goods, but only received 20 of them so far; and many sellers are still suffering from the problem of warehouse division, with complaints like "300 pieces of goods were transferred to 29 warehouses", "It seems that SKUs with poor sales are more likely to be divided into warehouses. The sales volume is already poor, and then there is warehouse division, which really makes the situation worse."

AGL warehouses can solve the problem of divided warehouses to a certain extent, but they also cannot escape the situation of "low efficiency". Many sellers said that the goods have not moved for a long time after arriving at the warehouse, and the freight seems very cheap, but after adding other hidden charges, there is actually not much price advantage.

Cross-border logistics costs are closely related to sellers' operating profits. When asked , "The current logistics cost rate in the cross-border e-commerce industry is relatively high and has increased recently. Will it put pressure on the company's profits in the future?" Savi Times recently accepted an investor survey and said that the company can use its brand premium capabilities to gradually absorb these general rate increase factors through price adjustments.

Faced with this wave of logistics price increases, many freight forwarders may have an easier time, and many sellers are actively looking for ways to absorb logistics costs.