Shipping costs have finally come down
The cost of shipping goods from China to the United States finally fell. The graph below shows the spot rate (i.e. the rate it costs to take a shipment halfway around the world ASAP) to transport a 40ft container from China to the west coast of the United States halved between September and October:
Here’s the same chart for the route from China to the east coast (data in both cases is from digital freight forwarding company Shifl):
This is, industry executives note, in large part the result of the Covid-19 epidemics and power shortages in China. So will the prices stay that low?
Shabsie Levy, founder and CEO of Shifl, thinks so, saying that agents who have taken advantage of price increases and congestion by buying capacity are now looking (perhaps feeling the market has peaked) at the unload quickly.
“For shippers [somewhat confusingly, a term that refers to exporters and not the shipping lines] with inventory still in China, access to capacity at competitive prices is great news, ”said Levy. “But the big question now is whether or not there will be products to fill these containers.”
Levy adds, “These rates could go down further. We are already seeing long-term rates for shipping 40-foot containers from China to the United States drop below $ 5,000. ”
This is still considerably more than pre-pandemic rates. Still, lower prices than we’ve seen over the past 12 months would indeed be good news for global manufacturers. Especially for small businesses that have found themselves overpriced in a market that has favored the global behemoths of manufacturing and retail.
We’re not as optimistic as we saw it end, however. Congestion at America’s busiest port complex, LA and Long Beach, is expected to remain severe for some time to come. And then there’s the push in Christmas demand to consider.
Rates could slightly exceed current levels in the coming weeks as retailers in the United States and Europe continue to prepare for the holiday season. Although September 2021 may have marked the peak of what has been a dramatic increase in shipping costs.