Why Do Global Shipping Costs Keep Rising?
As we know, the COVID-19 pandemic has greatly impacted the global supply chain since 2020, and the continuous rise in shipping prices directly reflects this. Still, are there other reasons container shipping rates have recently become so expensive?
Continuing Global ImbalancesSince the beginning of 2020, many problems have accumulated, including imbalances in cargo production and demand, differences in the timing of lockdowns and openings across countries, shipping lines cutting capacity on major shipping routes, etc. All of these problems from an unbalanced recovery will continue to exacerbate world trade conditions, putting more pressure on maritime capacity and container shipping costs in the short term.
Shipping Containers ShortageDuring the pandemic, China opened up its economy faster than the US and Europe, resulting in many shipping containers being held up on both continents. At the same time, China is facing a shortage of shipping containers. In other words, almost 200 million containers worldwide but all of them are in the wrong place.
Although the influx of new container capacity and the upcoming increase in shipping capacity will ease the pressure on global shipping costs, it will also be difficult to bring freight rates back to pre-pandemic levels.
Increased Consumer DemandSince the pandemic, many countries have seen a weak brick-and-mortar economy, and more consumers are choosing e-commerce marketplaces to purchase goods. From small items such as clothing and daily groceries to large items like furniture, electrical appliances and production equipment, consumers buy online not only in large quantities but also in a wide variety of products.
Global demand is surging, but supply stays the same or even decreases. Such a large volume of shipments can bring higher delivery-related costs in sea shipping. Likewise, disruptions in the supply chain force enterprises to charge more for products to offset their shipping costs.