Over last year, we saw a dramatic rise in container rates. These peaked at $10,400 in September, and have yet to decrease to pre-pandemic levels. The current rates still hover at ten times pre-pandemic costs.
These rates have risen alongside an increase in delays. These have caused goods to make the journey from China to U.S. warehouses.
What Is Causing This?
The global freight shipping network is a delicate system. Any form of disruption ripples through the whole system. Effects of the pandemic alone have been cascading across the network for the last two years.
In addition to this major factor, other problems have recently compounded the strain of the pandemic.
Congestion
The newest lockdown in Shanghai has led to two-day waits for arriving vessels, and a drop in export volumes. In an attempt to circumvent this, some have begun diverting exports to other ports less capable of handling additional volume.
Other Chinese ports are experiencing similar problems. Ports such as Yangshan are operating at 50% capacity due to Covid restrictions.
One in five of the global container ship fleet is currently stuck in congestion at major ports throughout the world. This dilemma has only worsened as freight previously carried by train to Western Europe via Russia divert to seek alternative sea routes.
Shipping Container Shortages
Furthermore, container shortages have persisted well into this year. These are the lifeblood of the shipping industry. Their shortage has made containers harder to buy or rent.
These shortages are partially caused by the previously mentioned congestion. This has tied up shipping containers in transit, unavailable for new exports.
The same lockdowns that are causing congestion at major ports have dramatically impacted manufacturing’s ability to produce more containers. Thus, they are unable to keep pace with increased demand. Available shipping containers have therefore become a highly sought-after commodity.
What Does All This Mean?
This will most likely continue for some time with no end currently in sight. Even when China lifts Covid restrictions, the expectation is for the surge in export traffic to increase congestion further. The resulting bottleneck is will reverberate across the many aspects of shipping for quite some time.
It is uncertain when rates will return to normal. However, shipping costs will remain high until these issues resolve. Retailers should prepare themselves to compensate for these costs for the foreseeable future.
We here at Anata are monitoring the situation for any changes. Contact us today for help handling your Amazon Marketplace during this logistical struggle.
