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Sea freight rates have not shown signs of cooling down.

11/06/2024 15:05


According to the "South China Morning Post", sea freight rates from China increased sharply again as exporters "lined up" for the holiday season. The reason is that they are concerned about the increase in US tariffs on the country's goods and the prolonged disruption in the Red Sea.

The Shanghai Container Shipping Index, a measure of container freight rates (compiled by the Shanghai Freight Exchange), rose 12.6% to 3,044.77 points last week. This is the first time since August 2022 that this weekly index has exceeded 3,000 points. Transport businesses said this price increase will continue as more and more exporters "book" orders on ships bound for the US and Europe.

In a research report, head of research at global freight booking platform Freightos Judah Levine said shippers could face very high freight rates and increased delays for months due to high demand amid limited transport capacity. However, the timing and scale of these disruptions and price increases may be less severe than those unprecedented during the Covid-19 pandemic.

Chinese exporters in sectors such as garments, toys and festive lights, often start shipping goods as early as July to meet Western demand for Christmas and New Year. This year, exporters began to worry after U.S. President Joe Biden announced in May that the U.S. would impose punitive tariffs on $18 billion of Chinese goods, including electric vehicles, battery components and solar panels.

According to Mr. Xiong Hao, Assistant General Manager of Shanghai Jump International Shipping Group, the cost of transporting a 20-foot container from Shanghai to Europe is now more than $7,000, an increase of about $1,000 compared to a month ago. He said there is currently a shortage of empty containers in Shanghai amid rising demand from exporters.

In a recent research report, HSBC said that the depletion of US retailers' inventory means that they now have to rely on imports to meet consumer demand, thereby boosting the demand for container transportation.

Yan Jun, senior executive director of Shanghai steel products manufacturer and exporter Jinghan Stainless Steel Products, commented: "Concerns about escalating trade tensions between the US and China have prompted manufacturers to arrange the shipment of finished goods as soon as possible." Disruptions in Red Sea shipping due to attacks by Houthi forces in Yemen on ships are also a major concern as exporters scramble to process shipments as soon as possible.

China's trade and shipping hub is known as the busiest container port in the world. China has overtaken Singapore to win this position since 2010.



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