Why shipping freight rise so much in 2021?

Shipping costs have risen sharply from beinggin gof 2021, many of our customers are wondering why the frieight rise so much in 2021?

Here is the article from United Nations Conference on Trade and Development, which we think explain very well on the reason.

Unprecedented shortage

Contrary to expectations, demand for container shipping has grown during the pandemic, bouncing back quickly from an initial slowdown.

“Changes in consumption and shopping patterns triggered by the pandemic, including a surge in electronic commerce, as well as lockdown measures, have in fact led to increased import demand for manufactured consumer goods,    a large part of which is moved in shipping containers,” the UNCTAD policy brief says.

Maritime trade flows further increased as some governments eased lockdowns and approved national stimulus packages, and businesses stocked up in anticipation of new waves of the pandemic.

“The increase in demand was stronger than expected and not met with a sufficient supply of shipping capacity,” the UNCTAD policy brief says, adding that the subsequent shortage of empty containers “is unprecedented.”

“Carriers, ports and shippers were all taken by surprise,” it says. “Empty boxes were left in places where they were not needed, and repositioning had not been planned for.”

The underlying causes are complex and include changing trade patterns and imbalances, capacity management by carriers at the beginning of the crisis and ongoing COVID-19-related delays in transport connection points, such as ports.

Rates to developing regions skyrocket

The impact on freight rates has been greatest on trade routes to developing regions, where consumers and businesses can least afford it.

Currently, rates to South America and western Africa are higher than to any other major trade region. By early 2021, for example, freight rates from China to South America had jumped 443% compared with 63% on the route between Asia and North America’s eastern coast.

Part of the explanation lies in the fact that routes from China to countries in South America and Africa are often longer. More ships are required for weekly service on these routes, meaning many containers are also “stuck” on these routes.

“When empty containers are scarce, an importer in Brazil or Nigeria must pay not only for the transport of the full import container but also for the inventory holding cost of the empty container,” the policy brief says.

Another factor is the lack of return cargo. South American and western African nations import more manufactured goods than they export, and it’s costly for carriers to return empty boxes to China on long routes.

For more information, welcome disucss with us by Email sales@brightcabinet.com. 

The website we quoted from https://unctad.org/news/shipping-during-covid-19-why-container-freight-rates-have-surged