Shippers might finally be catching a break, as China-US spot freight rates plunge in the first week of October.
With Chinese manufacturers throttling production due to the power crisis and the off-season coming into view, competition for freight capacity in terms of containers and vessel space has fallen off, moving prices down by up to 51.4% on some routes.
The shipping industry and particularly exporters and importers have been subject to heavy freight rate increases since the 3rd quarter of 2020 increasing from around $2,032/40′ in September 2020 to $10,519/40′ in September 2021.
Many customers have been complaining about the attitudes of shipping lines who they claimed were breaching contracts and demanding higher spot freight rates.
Perhaps taking cognisance of this, CMA CGM, the world’s fourth largest container shipping line has taken a decision to stop all spot rate increases.
Mass container shortage has disrupted international supply chains and seen the cost of freight and shipping increase exponentially across all sectors.
While it may be easy to blame this single factor for an increase in freight cost, many more factors have contributed to the inflated prices we are currently seeing across the sector.
So what are some of the other reasons that prices can’t seem to slow down?
Port Congestion, equipment and space capacity crunch are impacting businesses with supply chains and consumers heavily impacted..
In a webinar, Rachel Premack, Senior Investigations Reporter at Business Insider, Michael J Gordon, Senior FMC Advisor (retd), and Adam Compain, SVP of Global Growth at project44 discuss how rising freight prices have set off a domino effect, manifesting across supply chains through port congestion, drayage holdups, dropping inventories, inflation and lengthening lead times..
They reference insights from a market survey of over 200 supply chain professionals and talk through a possible timeline to a freight market cool down, when it can potentially happen and the circumstances that will lead us there..
2020 will be remembered by many as one of the years that has caused maximum upheaval in terms of freight rates, space and equipment capacity in all markets around the world.
While the impact on the Trans-Pacific and Trans-Europe has been the maximum, other trades like the India trade has also been affected quite substantially.
These never before seen steep increases especially on the exports, has sent the export community in India into a frenzy as shipping lines continue with the increases one after the other.