Why is the freight rising all the time?

At present, the high freight rate and the difficulty in booking space are mainly due to the shipping company’s capacity, which is difficult to meet the sudden growth of shipping demand.

1.International logistics capacity declines

Since 2020, due to the impact of the COVID-19, most shipping companies had pessimistic expectations on the international shipping situation, so they reduced their transportation capacity.

2.No containers

Shipping companies have also raised rates because there are no containers for exporting goods, with rates to the United States up 60% in the past three months. In terms of African ports, the rate has more than doubled to almost 100%, while the freight rate in Europe has also soared by 50%. There is no route without a price increase.

3.More and more ships from China

Since early April 2020,the pandemic has been efficiently controlled in China, the exportation shows strong resilience. It has been increasing for nine consecutive months. In the first three quarters, the cumulative growth rate was 1.8%, which exceeded the general market expectation.

The total export value in September 2020 was 1661.97 billion yuan, an increase of 8.7% year-on-year. 

While the resumption of work and production has been advanced for several months and European and American countries have restarted economic activities little by little, the pandemic has brought a really heavy blow to the container shipping companies. So It will take time to restore the normal transportation state as usual and the shipping prices will probably remain high in the short future.

In the second quarter of this year, the net profits of COSCO Haikong, CMSC, COSCO Haineng, CNOOC Nanyou, and COSCO Haifa increased by 53.79%, 520.93%, 5481.39%, 159.56%, and 66.51%, respectively.

The original article was published on our Linkedin.

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