Soaring container rates risk stifling post-COVID recovery
TOKYO – The surge in international container shipping rates in recent months has left businesses dependent on shipping facing increasing delays and costs that risk bogging down a post-coronavirus economic recovery.
The spot rate for shipping from Shanghai to the west coast of the United States rose to $ 4,000 per 40-foot container, according to the Shanghai Shipping Exchange, 2.4 times the figure from the previous year. Shanghai’s tariffs to Europe have quadrupled to $ 4,400 per 20-foot container. Spot prices for shipments to Southeast Asia, South America and South Africa rose three to six times to the highest levels in data dating back to 2009.
The impact is rippling through all Japanese companies. A retailer that sells household products made in China and elsewhere said shipping costs increased significantly from December. Shipments from China and Southeast Asia to Japan can now cost more than four times what they used to be, depending on the day of the week, according to the company.
The shipments themselves also face delays. Some of its stores are sold out or are about to sell cleaning supplies and storage products.
A mid-size farm machinery maker was forced to postpone the departure of a shipment to Europe until February from January. “We were not able to cover the skyrocketing shipping costs on our own, which is why we had our European customer covered this time on an exceptional basis at 50%,” said a representative of the UK. society.
Another manufacturer, which exports auto parts from Southeast Asia to North America, said shipping companies have turned down some shipments even when offered at peak prices.
The company is working to improve its logistics efficiency and is planning global cost reduction action to help absorb soaring shipping rates. But it will likely still struggle to cover the difference on its own, and eventually will have to consider price hikes.
Shipping volumes have exploded since last summer, which saw an increase in shipments to North America. Consumers locked in the home bought products suited to their new lifestyles, with demand for high-priced furniture and appliances fueled in particular by a stock market rally and loose monetary policy. Shipments of auto parts and semiconductors also increased in the fall.
Ocean container shipments from Asia to the United States jumped 28% year-over-year in December, marking a fifth consecutive month of double-digit growth, according to the Japan Maritime Center.
This has led to the stacking of containers in the U.S. Compounding the problem is congestion at west coast ports, where soaring volume and the need for coronavirus precautions have slowed the unloading of cargoes, leaving ships and their containers stranded.
Freighters can currently wait a week or more before disembarking there. A new cluster of coronavirus infections was discovered at a Los Angeles port in January, and shipments are feared to face further delays and price hikes.
The tight global supply of containers has helped drive up shipping rates to other destinations, including Europe, where shipments of personal computer peripherals and auto parts have started to pick up again, albeit a little later than in the United States.
Shipping companies are working on an international framework for sharing empty containers, although industry insiders don’t expect a quick fix. “I don’t think the container shortage will go away until at least May or June,” said Takashi Maruyama, director of Mitsui OSK Lines.