Recently, there has been a significant upward trend in freight rates in the global shipping market, which not only brings substantial profits to shipping companies but also puts unprecedented pressure on shippers and freight forwarders. Behind this phenomenon is the result of multiple intertwined factors.
1. Global trade recovery and surge in demand
With the gradual recovery of the global economy, trade between countries has become increasingly frequent, and the demand for maritime transportation has also surged. Especially in China, as one of the world’s largest exporters of goods, its total import and export value of goods trade exceeded 10 trillion yuan for the first time in the first quarter of 2024, a year-on-year increase of 5%, and the growth rate reached a new high in six quarters. At the same time, the rapid development of cross-border e-commerce has further intensified the growth of maritime demand.
2. Shortage of transportation capacity and difficulty in shipping space
While demand is surging, shipping capacity is relatively tight. On the one hand, due to the uneven recovery of global trade, the capacity of some popular air routes is difficult to meet market demand; On the other hand, factors such as ship maintenance, repairs, and epidemics have also affected the normal supply of maritime transport capacity. In addition, the longer voyage and increased number of transit ports have also exacerbated the situation of tight transportation capacity. These factors collectively led to the difficulty in finding cabin space, resulting in a natural increase in sea freight rates.
3. Geopolitical factors and increased maritime risks
Geopolitical factors are also one of the important reasons for the increase in sea freight rates. Recently, the escalation of the situation in the Red Sea and the spread of the conflict between Palestine and Israel have forced global shipping companies to face more maritime risks. In order to cope with these risks, shipping companies have to increase insurance costs, detour around the Cape of Good Hope in South Africa, and other additional expenses, which will ultimately be reflected in ocean freight rates.
4. Rising costs and profit pressures for shipping companies
Against the backdrop of tight transportation capacity and scarce cabin space, the operating costs of shipping companies are also constantly increasing. The maintenance, overhaul, and fuel costs of ships are constantly rising, while shipping companies are facing profit pressure. In order to maintain normal operations and profits, shipping companies have to cope with the pressure of rising costs by increasing freight rates.
5. Imbalance between supply and demand in the maritime market
Under the combined effects of surging demand, tight transportation capacity, increased geopolitical risks, and rising costs for shipping companies, the supply-demand relationship in the maritime market has become imbalanced. This imbalance has led to a sustained increase in ocean freight rates, and is expected to continue to do so in the foreseeable future.
In summary, the recent surge in sea freight rates is due to various reasons. From the perspectives of global trade recovery and surging demand, tight transportation capacity and difficult availability of space, increased geopolitical factors and shipping risks, rising costs and profit pressures for shipping companies, as well as supply-demand imbalances in the shipping market, these factors have collectively driven the rise in shipping rates. Faced with this trend, shippers and freight forwarders need to closely monitor market dynamics and actively seek response strategies to reduce transportation costs.
Post time: Aug-02-2024