The unprecedented rise in container prices is worrying because 60% of global goods are shipped in containers. This is crucial because the shortage of containers affects the need to ship goods from China, and e-commerce companies and consumers bear the brunt of higher costs.
The steep rise in ship prices affects all industries that transport goods, but analysts say that e-commerce and Western consumers will bear the brunt of it, as most e-commerce sellers in North America and Europe deal with Chinese suppliers.
According to Freightos, an online freight marketplace, the price of shipping a 40-foot container from China to northern Europe quadrupled and tripled last year. According to Drewry Shipping, transporting a 40-foot steel container cargo from Shanghai to Rotterdam cost a record $10,522, a whopping 54.7% above the seasonal average of the past five years.
According to Freighto data from Freighto and a New York Times report, container costs jumped from China and East Asia to America’s east coast to $20,000 compared to $4,000 a year ago.
Spot prices for containers on the East Coast route between China and the US, one of the world’s busiest container routes, have climbed by approximately $500 to $20,804 a week this year, FreightOS says.
The cost of a West Coast between China and the US can be as high as $2,000, and the most recent China-Europe exchange rate is about $14,000, FreightOs data show. Shipping costs are only a small fraction of the final price of manufactured goods and economists from Goldman Sachs Group Inc. estimated in March that shipping costs would be less than 1% if prices in China and Europe were half the current level.
High demand has led to bottlenecks in ports around the world and pushed up the prices of raw materials and industrial goods. On top of that, soaring demand for Chinese exports means that it is much more profitable for shipping companies to return empty containers to China, where they have to travel an entire journey to collect the imports. The result is that containers are becoming more expensive, forcing shipping companies to charge higher freight rates to cover the costs.
Freight companies are ordering new container ships to address the shortfall, but these ships need two to three years to be built, so it will make no difference in the short term.
Container shipping rates between China and the United States have reached new highs of up to $20,000 per 40-foot cage and are rising as the retail orders for the peak US shopping season weigh on global supply chains. Singapore is crucial, as a shortage of containers drives up shipping costs and delays for goods bought in China.
There is enough shipping chaos, congestion, congestion in container ports, congestion in rail terminals, container shortages and delays of all kinds, various bottlenecks, including a semiconductor shortage that is having a devastating effect on the automotive industry and consumer electronics, rising consumer prices, skyrocketing transport costs across the spectrum, and an over-stressed economy fending off a supply chain nightmare.