Since China emerged from the coronavirus lockdown in June, the country has regained its reputation as the world’s factory, churning out goods at full tilt to meet
Date: Monday, December 14, 2020
Source: South China Morning Post
- With exporters scrambling to meet delivery schedules and commitments, shipping freight rates from China have surged by more than 300 per cent since March
- Uneven distribution of containers at major ports around the world is causing a major headache for Chinese exporters
Shipping executive Howard Xiong has spent most of his time in the office since September frantically calling ocean liners and agents to book containers for his clients.
This has proved to be a daunting task as containers are in short supply. With exporters scrambling to meet delivery schedules and commitments, shipping freight rates from China have surged by more than 300 per cent since March.
“During my 25 years in the industry, I have never seen such an acute shortage of containers,” said Xiong, an assistant general manager with freight forwarder Shanghai Jump International. “The Covid-19 pandemic has brought a dramatic change to the shipping business in Shanghai, for better or worse.”
With imports in China falling way short of exports, container vessels leaving overseas ports have not been able to reach full capacity. As a result, containers have been stacking up at container yards abroad while ports in mainland China, including Shanghai, Xiamen and Ningbo have insufficient inventory of containers for exporters to use.
Xiong said his clients looking to book a shipping space on a vessel bound for North America would have to spend an additional U$$3,000 for a premium service that guarantees containers, priority loading and shipping.
Ocean carriers that used to charge US$1,200 for transporting a container to the west coast in the US in March were charging US$5,000 in November. The rates have stayed at this level as Shanghai port still lacks containers to meet exporters’ demand.
“The market was crazy in October and November because some clients failed to get containers for loading even when they were willing to pay a much higher freight rate,” said Xiong. “The shortage problem has still not been fully resolved.”
Lu Ming, an agent with Shanghai Ocean Shipping Agency, said shipping companies have benefited from the rising freight rates because of the imbalance of exports and imports via China. The freight rates will come down when foreign economies and business activities return to normal, he added.
Currently, ocean carriers were transporting empty freight containers on vessels bound for Chinese ports to help ease the shortage.
However, the problems do not end here for exporters. Major container ports such as Shanghai are grappling with congestion, forcing exporters to wait for as long as a week to get their shipment loaded.
“We still need more imports to ease the containers situation here,” said Xiong. “The past four months have been just too hectic for all of us. We hope everything can go back to normal soon.”