Analysis of the Reasons and Effects Behind the Rise in Shipping Costs

As an important mode of transportation for global trade, sea freight has recently shown a significant increase in costs. In terms of the European route, the European route consolidated shipping 2408 futures contract listed for trading on the Shanghai International Energy Trading Center has risen by 343.79% over the year. The average month on month increase in spot shipping prices for European routes in June exceeded 30%. The average freight indices for China's exports to Europe and Mediterranean routes were 2607.88 points and 3123.84 points, respectively, with month on month increases of 34.9% and 23.1%, respectively. The average market freight rates were $4336/TEU and $4969/TEU, respectively, with a month on month increase of 32.7% and 18%.

The US route also saw a significant increase, with the average freight rate index for China's exports to the West and East US routes being 1391.08 and 1505.62 points, respectively, up 32.7% and 31.6% month on month. The freight rates on the US East Coast route have risen above the 10000 yuan mark, from $8300-8400 to $10300-10400.

The South American route is also not far behind, with a market freight rate of 6686 US dollars/TEU from Shanghai Port to South American basic ports, a weekly increase of 22.4%. Since March 22nd, the cumulative increase over the past two months has been about 177%. In addition, the sea freight costs departing from Asia have significantly increased since May due to the Red Sea crisis, and the European line prices of various train companies have risen by 10% to 20%. The widespread increase in shipping costs has brought enormous challenges and pressure to global trade.

The situation in the Red Sea region has become further tense, forcing shipping companies to detour around the Cape of Good Hope, which has extended the voyage by more than 10 days. According to statistics, after circumnavigating the Cape of Good Hope, the current price of 40 foot containers from Shanghai Port or Qingdao Port to Rotterdam Port in the Netherlands was generally around $8000 in July, which was more than five times higher than before the outbreak of the Red Sea supply chain crisis in November last year. This not only reduces the transportation capacity of shipping companies, but also leads to insufficient ship space due to the extension of the voyage, further pushing up shipping costs.

In South America, especially Brazil, exports to Chinese new energy vehicle companies may face additional tariffs in the coming months. Many car companies have started to ship large quantities without actual orders, such as BYD, which has sent over 100000 cars to the region. This occupies a large amount of maritime resources, leading to congestion at ports and yards. In order to get a share of the pie, some shipping companies have even withdrawn their ships heading to West Africa and instead headed to South America, which has led to a surge in freight rates on West African routes.

On the US side, there are rumors that a 50% to 60% tariff may be imposed on Chinese products in the future, which has made many goods eager to be shipped to the US before the tariff increases. Shipping companies are now joining forces to increase freight rates and taking advantage of this opportunity to speculate on shipping positions in order to gain higher profits. This situation has brought considerable pressure to shippers and direct customers' freight forwarders, and it is expected that this price increase trend will continue for at least six months.