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Caixin

Cost of shipping between China and U.S. plunges

Looming off-season and power crunch have forced prices down after
record highs

[https]
Yangshan Deep Water Port in Shanghai. Shipping costs from China to
the U.S. skyrocketed after the start of the pandemic and have now
moderated but remain high.   (c) Reuters
JIA TIANQIONG and ZHANG YUKUN, CaixinOctober 4, 2021 12:14 JST | 
China
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[https][https]

The cost of shipping between China and the U.S. plunged this week
after hitting record highs in early September as the off-season
approaches, a power crunch slows Chinese manufacturing and
speculators rush to sell their hoarded shipping spots.

An executive with a Shanghai freight company said Thursday that the
cost of shipping a 40-foot container from China to the U.S. West
Coast dropped nearly half in the previous four days, going from about
$15,000 to just over $8,000. The spot rate for shipping to the East
Coast had fallen by more than one-quarter from over $20,000 to less
than $15,000.

Prior to the pandemic, the rate was usually around $1,500. The cost
of shipping has skyrocketed since the start of the pandemic. On the
demand side, U.S. consumers stuck at home spent more on durable
goods, such as gym equipment and furnishings.

However, congestion at ports around the world led to a dearth of
containers and speculation by scalpers looking to make a profit from
rising prices.

In the last week of September, the shipping rate on a route between
China and the West Coast almost halved, Caixin learned from freight
forwarders. The route is operated by Matson, one of the biggest U.S.
container freight companies.

Matson said it has nothing to do with the slump in spot shipping
rates, and the Oct. 2 long-term rate for shipping a 40-foot container
from China to the West Coast it reported to the Shanghai Shipping
Exchange was up $200 from a month earlier.

An analyst at Tianfeng Securities said that shipping companies often
set the long-term rates, but the spot rates quoted by shipping
forwarders are the actual market prices determined by supply and
demand.

Many long-term rates listed on the Shanghai Shipping Exchange for
shipping a 40-foot container from China to the U.S. are under $5,000,
much lower than the spot rates.

The plunge in spot shipping rates, the analyst said, is mainly caused
by the imminent off-season and a reduction in manufacturing due to
China's ongoing power crunch.

Multiple provinces across China are suspending factory production to
ameliorate energy shortages or to meet the central government's
energy consumption control targets. As production restrictions began
to be implemented, scalpers dumped their hoarded container spots,
contributing to the price tumble, the source from the Shanghai
shipping company said. He added that the scalpers had to rush to sell
off the spots between Oct. 1 and Oct. 7 before the start of the
seven-day Chinese National Day holiday, which starts at the beginning
of the month.

Experts are split on how shipping rates will develop in the near
future. A research report by CSC Financial said shipping rates would
stay relatively high in the next two weeks as U.S. ports stay
congested and the gap between supply and demand remains large. The
Tianfeng Securities analyst, however, predicts a decline in shipping
rates, as export growth is expected to slow in the fourth quarter,
the off-season for ocean freight shipping.

--

Read also the original story.

Caixinglobal.com is the English-language online news portal of
Chinese financial and business news media group Caixin. Nikkei has an
agreement with the company to exchange articles in English.

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