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China-U.S. Container Shipping Rates Sail Past $20,000 to Record High

Ahead of an already challenging holiday season, the cost of getting a 40-foot container from China to the United States East Coast has exceeded $20,000. This milestone marked record number three in as many weeks and a 500% overall increase from the same route in the summer of 2020. Both figures are according to freight tracking firm Freightos, widely quoted on these phenomena.

Such “extreme” freight costs are indicative of wider problems in the supply chain – both on the water and land-side – problems the Clark-Esposito Law Firm, P.C. has been tracking throughout the pandemic, which is the root cause of a number of contributing headaches.

Indeed, there is something of a perfect storm affecting all links in today’s supply chain. The pandemic and lagging production continue to drain the overall system, along with underlying commodity scarcities, and of course, the notorious labor crunch, affecting everything from manufacturing to land-side freight operations and even retail spaces themselves.

This unusual confluence of factors is leading to longer waits for fewer products at higher prices – something U.S. consumers have certainly seen in just about every sector – from groceries to cars and home goods. Unfortunately the outlook is not great, with no relief in sight through winter 2022, according to UK-based industry experts Drewry Consultancy. In fact, another industry group, Ocean Shipping, noted that they do not expect any serious increase in shipping supply through 2023.

Regardless of available cargo space on ships, the daily log jam of dozens of vessels docked off of the Port of Los Angeles demonstrates that container availability is far from the only thing keeping products from retailers. Individual containers themselves sit for days, waiting on trucks (and truck drivers) that remain behind schedule – a logistics issue that has also found its way into the nation’s rail yards, as trains are themselves bottlenecked at major U.S. rail terminals.

For those with the need (and money), air cargo space has been the subject of bidding wars since early 2021 when the major space crunch set in. Air cargo pricing has reacted accordingly, with Shanghai-North America rates at $6.95/kg, a rise of 230% from 2019. Nearly the same picture emerged through the past summer for Shanghai-North Europe rates, up 180% from 2019. This information, collected from the Baltic Air Freight Index, has only gotten worse into the Fall of 2021, with continuing rate increases as high as $11/kg in September, also according to figures maintained by the Baltic Air Freight Index.

Every operator in the chain (sea and air) is working overtime to add capacity and improve efficiencies, however, problems on this scale do not lend themselves to quick solutions, so patience will be the name of the game for the foreseeable future.

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