Shipping prices between China and the United States continue to decline, and ports in the eastern United States are becoming increasingly congested

Recently, ocean freight has shown a clear downward trend. Some sellers reported that the price of containers to the West Coast of the United States has dropped by nearly US$5,000...

Unlike the situation of a sharp increase in shipping costs in the first half of 2021, shipping costs in the first half of 2022 have been in a stable and declining state. Recently, shipping costs have shown a clear downward trend. Last year, the peak was more than 20,000 US dollars. The normal price of a cabinet of 17,000 US dollars is currently between 8,000 and 9,000 US dollars. For cross-border e-commerce sellers, the decline in freight will directly reduce operating costs and bring sellers greater profit margins.

According to the Shifl China Office report, the trans-Pacific container spot freight rates from China to the West Coast and East Coast of the United States have been steadily declining recently. Compared with January 2022, the freight rates from China to the East Coast of the United States fell by 50% in March 2022, and the freight rates to the West Coast of the United States fell by 52%.

High shipping costs on the US line have fallen, but are still half as high as before the increase

For a long time, the increase in demand caused by the epidemic, as well as global supply chain congestion and container shortages, have caused freight rates to soar. This year, even though freight rates have continued to fall since the beginning of the year, they are still more than half higher than the same period last year. As for when freight rates can return to pre-epidemic levels, it may take longer.

Based on the fact that some of the problems that led to the increase in freight prices last year have been improved, coupled with some unexpected problems this year, such as the impact of the epidemic on domestic port shipments, the accumulation of empty containers at foreign ports, and inflation, the container market has been "oversupplied" and prices have shown a downward trend. The latest data from the Shanghai Shipping Exchange shows that the Shanghai Export Container Freight Index fell 0.8% from last week, showing a 13-day losing streak and hitting a new low since August last year.

Even though the container freight index continues to decline and freight rates have decreased, according to Marketplace Pulse data, container freight rates from China to the United States have exceeded US$10,000 for nine consecutive months. Although this has dropped by more than 50% compared to the peak last year, it is still more than six times the pre-epidemic freight rate (US$1,500).

Although the price of the China-Europe route is lower than that of the China-US route, the freight rate trend is similar to that of the China-US route.

US East Coast ports will become the next congestion hotspot

Along with the reduction in freight rates, congestion at western US ports has also increased. At the peak last year, more than 100 ships were waiting outside the ports of Los Angeles and Long Beach, with an average waiting time of more than two weeks. However, in early April this year, the number of ships waiting near the two ports has dropped to less than 40, with the waiting time for container ships near Los Angeles being about four days and the waiting time at the Port of Long Beach being one to two days.

But the risk of congestion at East Coast ports is increasing. Data shows that in the first quarter of this year, imports from Asia at East Coast ports such as Charleston, Savannah and Virginia increased by 16% year-on-year. Executives at major East Coast ports have warned that imports will surge this summer and ship congestion will occur.

Data from maritime analysis company MarineTraffic shows that as of April 12, there were 186,000 TEUs of containers near the U.S. West Coast, while 273,000 containers were headed for the U.S. East Coast. MarineTraffic said that importers on the U.S. East Coast currently have to wait longer to get their goods, for example, the average waiting time at the Port of Charleston has reached 9-10 days.

Since the second half of last year, due to the congestion of ports in the western United States, the number of giant ships turning to East Coast ports has increased significantly. Maersk warned customers that waiting times have increased at some East Coast ports, including Newark, Virginia and Charleston.

Although congestion at western U.S. ports is easing, negotiations between West Coast dockworkers and operators will begin next month. Foreign media reported that previous rounds of negotiations have affected the efficiency of docks during the process. Industry experts believe that the possibility of strikes or shutdowns on the East Coast is relatively low, so importers and carriers hope to ship goods to the East Coast.

The South Carolina Ports Authority believes that the Charleston Port's problems cannot be solved quickly because it requires more distribution center space, more truck drivers, chassis, and port infrastructure to handle and transport cargo. The Virginia Port Authority believes that their main problem is ship delays, which will continue until June.

The rise of “land-to-water” ports in the Yangtze River Delta

In addition to congestion at ports in the East Coast of the United States, factories and sellers in the Yangtze River Delta region of China also face difficulties in shipping.

Currently, affected by the epidemic in Shanghai, container trucks and trailers in the Yangtze River Delta region are facing problems with traffic jams across cities. A person in charge of a foreign trade factory said that the negative nucleic acid test certificate of Shanghai-licensed container truck drivers is relatively slow to be reviewed by the health code system in other places, and foreign-licensed container trucks need more filing procedures and certificates to enter Shanghai and Hong Kong, so there are fewer drivers willing to accept "Shanghai orders."

According to freight drivers, once their travel code shows that they have passed Shanghai and has a star, they will be persuaded to turn back when getting off the highway at highway intersections across the country. Even if they can get off the highway, they will have to be quarantined, so they generally do not accept "Shanghai orders."

This has led to a serious shortage of truck capacity to and from the Port of Shanghai, and a surge in freight costs. For example, the cost of trailers from Suzhou factories to the Port of Shanghai has more than doubled from the beginning of April to now, and is reaching new highs every day.

Although shipping from Shanghai faces many obstacles, freight forwarders still hope to ship from Shanghai Port because changing ports for shipping requires coordination with foreign consignees and shipping companies, which takes a long time to negotiate.

Road transport has been blocked, but water transport has been relatively less affected. Shippers in the Yangtze River Delta region have also begun to consider switching to water transport. A freight forwarding company employee said that barge business in Ningbo and Shanghai has been increasing recently.

Some cargo owners will divert the cargo that was originally shipped directly to Shanghai Port to Ningbo Port, Lianyungang Port and Taicang Port for shipment, and then transport it to Shanghai Port by barge . This practice has also been supported by the government. Recently, Shanghai Port and Taicang Port jointly issued the "Notice on Reasonably Improving the Ability of Waterway Supply and Smoothness of Shanghai and Taicang Ports", announcing the expansion of waterways, increasing transportation capacity, and reducing related fees.

A freight forwarder said that under normal circumstances, barge transportation is nearly one-third cheaper than road transportation for the same transportation route, but the speed is slower. Customers generally choose road transportation to save time. During the epidemic, although the transportation time of barges was also affected, compared with roads, the transportation time of barges is still relatively stable.

However, according to freight forwarders, larger companies usually choose barges, while smaller companies with smaller cargo volumes still choose road transportation.

Shipping costs fall

Port congestion

China and the United States