The Raising Shipping Cost – How Should We Act?
An ‘aggressive’ fight over containers is causing shipping costs to rocket by 300%
A critical shortage of containers is driving up shipping costs and delays for goods purchased from China.
The pandemic and uneven global economic recovery has led to this problem cropping up in Asia, although other parts of the world have also been hit. Industry watchers said desperate companies wait weeks for containers and pay premium rates to get them, causing shipping costs to skyrocket.This affects everyone who needs to ship goods from China, but particularly e-commerce companies and consumers, who may bear the brunt of higher costs.
In December, spot freight rates were 264% higher for the Asia to North Europe route, compared with a year ago, according to Mirko Woitzik, risk intelligence solutions manager at supply chain risk firm Resilience360. For the route from Asia to the West Coast of the U.S., rates are up 145% year over year.Compared with last March’s low prices, freight rates from China to the U.S. and Europe have surged 300%, Mark Yeager, chief executive officer of Redwood Logistics, told CNBC. He said spot rates are up to about $6,000 per container compared with the usual price of $1,200.
Something behind the Fact of Container Shoratage
Apart from the imbalance that raises the operation, container distribution and container supply cost which shipping lines are tranferring to customers by implementing rate increase, there are something eles behind what we have witness.
Such an occasion also reveals the oligopoly nowadays due to the fact the shipping liners have their dominant power in the market. Ocean Alliance, THE Alliance and 2M together take aproximately 80% of the total global container shipping market share.
To some purpose to keep a kurb on the situation, the U.S. Federal Maritime Commission and the Department of Justice have signed an agreement to increase cooperation and communication in oversight and enforcement responsibilities of the ocean liner shipping industry.
FMC also has established an audit program, with a dedicated audit team, to assess carrier compliance with the agency’s rule on detention and demurrage. We can foreseen that in the coming several months there will be more and more countries that take action to have the situation controlled.