As a fast charger factory in China, our 70% orders are exported to US and Europe countries, however the sea freight cost is nearly a double for US lines, also extended shipping date make our customer crazy. Some feedback from our customer
“My God, we pay 215% increase in shipping. “
“Hi Ada, I am sorry for that we have drop the project now as the Spain is locked down again“
“Please wait to deliver, I have not ordered container yet, it is crazy that I have to confirm the price within half an hour. Or I lose it. “
“Please help, I can not ship the goods now, too expensive. “
The rising sea freight cost have continued to increase , which makes more pressure on Chinese foreign trade companies. Since 2020 Covid, the “difficult to find one box” of global freight containers has not yet been resolved. The rising sea freight rates continue to set historical records. The common problems faced by the global industrial chain are still highlighted. The industry generally expects freight rates to remain high throughout the year. There are some 5 reasons why sea freight cost can not drop down
1. Continued global imbalances push prices up further
Due to various reasons , the pandemic haves imbalances in the production and demand for goods, with countries locking down and opening up at different times, as well as shipping companies cutting the capacity on major routes and shortages of empty containers. As the recovery has progressed, global demand has recovered strongly, especially in the sectors which are most closely linked to international trade in goods. Competition for ocean freight capacity has intensified as economies open up further and inventories are rebuilt across the several links of supply chains.
2. Few alternatives to ocean freight
A lack of alternatives to ocean freight means it’s hard to avoid surging transport costs at the moment. For higher value products, alternative modes of transportation would normally be an option, such as the shipment of electronic devices by air or via train, not least through the ‘Silk Road’. But capacity is currently limited, and tariffs have spiked as well. Shippers of lower value products such as household items, toys, promotional articles or t-shirts have seen freight costs increase from around 5% of their sourcing costs to more than 20%.
The difficulty of absorbing increases on this scale in margins means that consumers may start to feel the impacts through price increases, or changes in product availability.
3.An unbalanced recovery throughout 2021
Some countries are already exporting more goods than they did before the pandemic, while in others, including the US, exports continue to lag behind the overall recovery in output. Trade in goods will rise further while not only the major trading countries, but also their trade partners, continue recovering. With the competition for ocean freight capacity set to remain, the unbalanced recovery will continue to exacerbate some of the problems for world trade, including displaced empty containers. It all adds up to more pressure on freight rates in the near term.
4.Reduced blank sailings will help ease capacity constraints
Globally, capacity on major shipping routes has recovered to levels before the major lockdowns in 2020, although blank sailings (cancelled port calls) continued to cut 10% of scheduled capacity through the first quarter. There are signs of improvement this quarter, which on current plans will average at 4%. But cancellations have partly been a response to delays, so while the system remains congested, shipping capacity may continue to be taken out of the system at short notice.
5.Port congestion and closures keep creating delays
As the link between cancelled sailings and delays suggests, congestion is part of the problem. Shipping performance in 2021 has carried on where 2020 left off, in terms of lower rates of vessels keeping to schedule, and average delays for late vessels rising. There are some signs that average performance will start to improve as the share of vessels reaching their destinations on time stopped sliding in April, and average delays improved. But overall performance remains the lowest it has been in ten years of records.
At the same time, the pandemic is still leading to disruptions, like the sudden closing of China’s Yantian container port – part of the world’s 4th largest container port Shenzhen – in early June. Even though operations have resumed, congestion and the continuing need for measures to stop the spread of Covid-19 mean delays continue to mount. Although China and other major trading countries are making progress with vaccination programmes, creating immunity will take time and consequently handing interruptions will remain a risk over the coming months.
In my Opinion, the major shipping companies may raise price again, hope we stick together make reasonable order &Shipping plans.
To support our customer, we continue to make best competitve pcb assembling solution , and will not delay any production schedule as we promise. Also we find possible cooperative shipping agent for our customer to compare. It is a difficult time now, but opportunities and risks often coexsit. Those who can persist will surely get rich rewords in the future.
Post time: Jul-07-2021