Freight rates soar to $100,000 a day, sellers: Profits are less than logistics costs

The profit is less than the logistics fee, just another day working for the shipping company!

In recent years, as congestion and warehouse overflows have become the norm at many ports around the world, shipping companies have made a lot of money and their profits have exploded, but the majority of cross-border sellers are suffering. With the arrival of the peak season, the already ridiculously high international logistics prices have been pushed up again. While the shipping prices are high, problems such as slow delivery, container shortages, and warehouse overflows continue to occur ...

Congestion at many ports around the world has caused container ship prices to soar to $100,000 a day

Since the outbreak of the epidemic, cross-border logistics that have "frequently gotten out of control" have attracted widespread attention from the outside world.

According to the latest report from CCTV Finance, Singapore, as an important transit point in the international shipping market, has been affected by the epidemic in many Southeast Asian countries, with a surge in cargo volume, port congestion, extended shipping schedules, and exponentially increased shipping costs. The industry believes that the current "shipping schedule reliability" of shipping companies has fallen to a 10-year low, causing almost all major seaports in the world to face further delays . The unloading time at the Port of Singapore has been extended from one or two days in the past to 5-7 days.

In addition, because shipping capacity has been suppressed, ship rentals have also been rising. A Panamanian ship with 4,200 containers costs a minimum of several thousand to ten thousand dollars a day, but now it costs up to 40,000 or 50,000 dollars. If it is urgent, the rental cost of $100,000 a day has been seen.

High cross-border logistics prices are now everywhere.

According to Shifl data, freight rates for a 40-foot container from China to the U.S. port of Los Angeles have risen to $17,500. Around March 2020, the price was only $1,350.

Air freight is even more expensive. The cost of shipping a 40-foot high cube container has risen from about $40,000 before the coronavirus to $100,000 to $130,000. As a result, most products continue to be shipped via ocean carriers.

The continuous demand for shipments coupled with insufficient cross-border logistics capacity will only make problems such as high logistics prices and slow delivery times more serious.

Shipping costs are much higher than the value of the goods, and cross-border sellers say they have worked for nothing for a year

As the peak season approaches, cross-border sellers should be prepared for worse logistics conditions.

Weibo blogger "Dedicated Logistics Person" said that as the National Day season began in September, the already high international logistics prices were pushed up again, making life even more difficult for small and medium-sized foreign trade companies. The situation where freight rates were higher than the value of the goods frequently occurred, and they could not even afford to ship the goods.

What's worse is that the delivery time is even slower. HKDHL/FedEx/TNT currently needs about 4 days to arrange a space, and UPS may need 10 days. UPS is now limited to accepting goods. Ocean freight is even more exaggerated, with freight costs doubled, and it is difficult to find a container. Many goods prepared for Christmas, on the one hand, are also loss-making by ocean freight, and on the other hand, due to the shortage of transportation capacity, they may not be delivered abroad before the holiday. If they become inventory until the end of the year, many merchants will have worked for nothing for several years.

Cross-border logistics is getting worse, and many cross-border sellers are complaining:

Can we save the small sellers? Sea transportation is now as difficult as air transportation, and this year is too difficult .

The current shipping prices are simply horrifying , seven, eight or even ten times higher than normal, and they are still rising with no end in sight !

It has been very difficult for foreign trade people since the outbreak of the epidemic. I finally made a batch of bulk goods, but from receiving the order to shipping, my profits were wiped out due to the increase in freight costs. I cried .

Originally, shipping a 40-foot container to Germany cost more than 30,000 yuan , but due to the epidemic , it rose to more than 60,000 yuan , and recently it rose to more than 80,000 yuan. After the congestion, there was an additional overtime fee for using the container , which became more than 100,000 yuan . Fortunately, the company is not owned by my family ...

In addition to cross-border sellers, freight forwarders are also deeply trapped in the various problems of cross-border logistics:

It's outrageous that the shipping company won't release the containers even though the shipping fee is so high, and we have to find scalpers to buy the containers .

It’s bad enough that the cabinets are ridiculously expensive and hard to get , but please don’t block the port .

We who make container accessories can’t even ship out our own goods .

…

Weibo blogger "Dedicated Logistics Person" said that due to the epidemic, the unloading of goods at North American (US, Canada) airports and ports was slow, resulting in serious port congestion. The airport even had a situation where the goods could not be picked up 30 days after arrival. No one even answered the pickup call at Chicago Airport. Not only is the freight rate high, but the delivery time is slow. Currently, express delivery is the only reliable transportation channel. If you care about delivery time, it is recommended to give priority to express delivery.

It has to be said that the cross-border industry is witnessing history every day!  

Hurricane hits U.S., closing ports and pushing freight rates higher

As global shipping capacity is tight and freight rates soar, trends in the US market are particularly noteworthy.

Today, even though the ports of Los Angeles and New York can handle imports much faster, congestion remains severe.

Project44 data shows that congestion has increased at four major ports in Southern California . As of August 26, there were still 41 ships anchored outside Los Angeles and Long Beach waiting for berths, and 33 ships anchored in the two ports. The last peak of congestion was in February, when 40 ships were anchored at the ports.

Meanwhile, regional ports also recorded record throughput as sellers /suppliers alike sought to get products to warehouses and stores before the festive season.

Not only are ports congested, but so are inland ports. Data shows that the West Coast's aging rail and road infrastructure is hindering the efficient transportation of containers. According to Executive Director Gene Seroka, the Port of Los Angeles faces a 30% no-show rate for truck appointments every day.

Project44 said the capacity /capacity mismatch between seaports and land transport could get worse in the coming weeks and months. Meanwhile, China's port problems, combined with tight inland shipping capacity and infrastructure issues, could prevent retailers from receiving inventory in time for this year's holiday sales season.

Data from the Association of American railways showed that in August this year , U.S. rail shipments were 1.08 million containers and trailers, down 3.3% from the same period in 2020.

To make matters worse, the United States was hit by a hurricane when its ports were already congested.

According to foreign media reports, on the 29th of last month, Hurricane Ida made landfall near Fourchon Port, Louisiana as a Category 4 storm .

According to a report from project44, container operations at New Orleans terminals and ports in the United States have been shut down. In addition, the Mobile container port on the Gulf of Mexico is closed, while the Port of Houston remains open. Meanwhile, the lower Mississippi River is closed to all vessel traffic, and the Inner Harbor Navigation Channel is closed. Operations at the New Orleans Rail Gateway have also been shut down.

The closure of the Port of New Orleans has a significant impact on U.S. shipping. According to Project44 data, the Port of New Orleans handles an average of eight container ships per week and is the 15th largest port in the United States. The port is located on the Mississippi River near the Gulf of Mexico and has access to more than 30 inland hubs such as Memphis, Chicago and Canada through 14,500 miles of waterways, six Class I railways and interstate highways. It is the only international port in Louisiana .

Under the conditions of tight shipping capacity and hurricanes, it has become inevitable that shipping freight rates to the United States will be further pushed up and port congestion will increase.

The profit is less than the logistics fee, just another day working for the shipping company!

In recent years, as congestion and warehouse overflows have become the norm at many ports around the world, shipping companies have made a lot of money and their profits have exploded, but the majority of cross-border sellers are suffering. With the arrival of the peak season, the already ridiculously high international logistics prices have been pushed up again. While the shipping prices are high, problems such as slow delivery, container shortages, and warehouse overflows continue to occur ...

Congestion at many ports around the world has caused container ship prices to soar to $100,000 a day

Since the outbreak of the epidemic, cross-border logistics that have "frequently gotten out of control" have attracted widespread attention from the outside world.

According to the latest report from CCTV Finance, Singapore, as an important transit point in the international shipping market, has been affected by the epidemic in many Southeast Asian countries, with a surge in cargo volume, port congestion, extended shipping schedules, and exponentially increased shipping costs. The industry believes that the current "shipping schedule reliability" of shipping companies has fallen to a 10-year low, causing almost all major seaports in the world to face further delays . The unloading time at the Port of Singapore has been extended from one or two days in the past to 5-7 days.

In addition, because shipping capacity has been suppressed, ship rentals have also been rising. A Panamanian ship with 4,200 containers costs a minimum of several thousand to ten thousand dollars a day, but now it costs up to 40,000 or 50,000 dollars. If it is urgent, the rental cost of $100,000 a day has been seen.

Figure 1

High cross-border logistics prices are now everywhere.

According to Shifl data, freight rates for a 40-foot container from China to the U.S. port of Los Angeles have risen to $17,500. Around March 2020, the price was only $1,350.

Air freight is even more expensive. The cost of shipping a 40-foot high cube container has risen from about $40,000 before the coronavirus to $100,000 to $130,000. As a result, most products continue to be shipped via ocean carriers.

The continuous demand for shipments coupled with insufficient cross-border logistics capacity will only make problems such as high logistics prices and slow delivery times more serious.

Shipping costs are much higher than the value of the goods, and cross-border sellers say they have worked for nothing for a year

As the peak season approaches, cross-border sellers should be prepared for worse logistics conditions.

Weibo blogger "Dedicated Logistics Person" said that as the National Day season began in September, the already high international logistics prices were pushed up again, making life even more difficult for small and medium-sized foreign trade companies. The situation where freight rates were higher than the value of the goods frequently occurred, and they could not even afford to ship the goods.

What's worse is that the delivery time is even slower. HKDHL/FedEx/TNT currently needs about 4 days to arrange a space, and UPS may need 10 days. UPS is now limited to accepting goods. Ocean freight is even more exaggerated, with freight costs doubled, and it is difficult to find a container. Many goods prepared for Christmas, on the one hand, are also loss-making by ocean freight, and on the other hand, due to the shortage of transportation capacity, they may not be delivered abroad before the holiday. If they become inventory until the end of the year, many merchants will have worked for nothing for several years.

Cross-border logistics is getting worse, and many cross-border sellers are complaining:

Can we save the small sellers? Sea transportation is now as difficult as air transportation, and this year is too difficult .

The current shipping prices are simply horrifying , seven, eight or even ten times higher than normal, and they are still rising with no end in sight !

It has been very difficult for foreign trade people since the outbreak of the epidemic. I finally made a batch of bulk goods, but from receiving the order to shipping, my profits were wiped out due to the increase in freight costs. I cried .

Originally, shipping a 40-foot container to Germany cost more than 30,000 yuan , but due to the epidemic , it rose to more than 60,000 yuan , and recently it rose to more than 80,000 yuan. After the congestion, there was an additional overtime fee for using the container , which became more than 100,000 yuan . Fortunately, the company is not owned by my family ...

In addition to cross-border sellers, freight forwarders are also deeply trapped in the various problems of cross-border logistics:

It's outrageous that the shipping company won't release the containers even though the shipping fee is so high, and we have to find scalpers to buy the containers .

It’s bad enough that the cabinets are ridiculously expensive and hard to get , but please don’t block the port .

We who make container accessories can’t even ship out our own goods .

…

Weibo blogger "Dedicated Logistics Person" said that due to the epidemic, the unloading of goods at North American (US, Canada) airports and ports was slow, resulting in serious port congestion. The airport even had a situation where the goods could not be picked up 30 days after arrival. No one even answered the pickup call at Chicago Airport. Not only is the freight rate high, but the delivery time is slow. Currently, express delivery is the only reliable transportation channel. If you care about delivery time, it is recommended to give priority to express delivery.

It has to be said that the cross-border industry is witnessing history every day!  

Hurricane hits U.S., closing ports and pushing freight rates higher

As global shipping capacity is tight and freight rates soar, trends in the US market are particularly noteworthy.

Today, even though the ports of Los Angeles and New York can handle imports much faster, congestion remains severe.

Project44 data shows that congestion has increased at four major ports in Southern California . As of August 26, there were still 41 ships anchored outside Los Angeles and Long Beach waiting for berths, and 33 ships anchored in the two ports. The last peak of congestion was in February, when 40 ships were anchored at the ports.

Figure 2

Meanwhile, regional ports also recorded record throughput as sellers /suppliers alike sought to get products to warehouses and stores before the festive season.

Not only are ports congested, but so are inland ports. Data shows that the West Coast's aging rail and road infrastructure is hindering the efficient transportation of containers. According to Executive Director Gene Seroka, the Port of Los Angeles faces a 30% no-show rate for truck appointments every day.

Project44 said the capacity /capacity mismatch between seaports and land transport could get worse in the coming weeks and months. Meanwhile, China's port problems, combined with tight inland shipping capacity and infrastructure issues, could prevent retailers from receiving inventory in time for this year's holiday sales season.

Data from the Association of American railways showed that in August this year , U.S. rail shipments were 1.08 million containers and trailers, down 3.3% from the same period in 2020.

To make matters worse, the United States was hit by a hurricane when its ports were already congested.

According to foreign media reports, on the 29th of last month, Hurricane Ida made landfall near Fourchon Port, Louisiana as a Category 4 storm .

According to a report from project44, container operations at New Orleans terminals and ports in the United States have been shut down. In addition, the Mobile container port on the Gulf of Mexico is closed, while the Port of Houston remains open. Meanwhile, the lower Mississippi River is closed to all vessel traffic, and the Inner Harbor Navigation Channel is closed. Operations at the New Orleans Rail Gateway have also been shut down.

Figure 3

The closure of the Port of New Orleans has a significant impact on U.S. shipping. According to Project44 data, the Port of New Orleans handles an average of eight container ships per week and is the 15th largest port in the United States. The port is located on the Mississippi River near the Gulf of Mexico and has access to more than 30 inland hubs such as Memphis, Chicago and Canada through 14,500 miles of waterways, six Class I railways and interstate highways. It is the only international port in Louisiana .

Under the conditions of tight shipping capacity and hurricanes, it has become inevitable that shipping freight rates to the United States will be further pushed up and port congestion will increase.

American Hurricanes