Now it is the second half of 2023, and shipping prices are already on the rise. According to the data, the SCFI index has risen for two consecutive weeks. The freight rates in the US West and US East markets have continued to rise and have exceeded the mark of 3,000 US dollars, an increase of 5.61%. On the other hand, the European line fell back after the price increase. People in the industry are watching the changes in the market, and they all hope that there will be another wave of big fluctuations this year.
At the end of July, the market predicted that there would be a new wave of rise in container freight rates in the future, but it was unexpected that the rise would actually come. The data shows that on August 4, the market freight rates from Shanghai to West America and East America rose by 3.04% and 5.61% respectively compared with the previous period. Within one month, the freight rates of Shanghai Port to the west and east of the United States increased by 43% and 27% respectively. Compared with the first half of the year, there are indeed many factors that promote sellers to ship in the second half of the year. For example, there are many holidays in the second half of the year, including two important festivals, Black Friday and Christmas. Sellers need to prepare and ship goods in August and September in order to have enough inventory during the big promotion.
The inventory of all sellers during the Covid-19 should have been exhausted. In addition, there are signs of recovery in the entire economy, and consumers will consume a lot due to the promotion of big festivals. These factors will give the seller a signal to ship. The market expects that there will be a new wave of freight rate increases in September. Amazon has announced that the second Prime Day in 2023 will be held in October, and sellers are also intensively stocking up after knowing the news. So there will be a wave of shipments later. All of these will lead to an increase in the overall freight rate and tight cargos.
Looking at the European market again, it is not the same as the US. The overall market demand in Europe is very stable, showing no signs of rising or falling. Despite some intervention by the industry, it failed to spark a rally in European markets. Due to uneven shipments, sometimes the freight rate in the European market will still rise, but it will return to the average level without the support of follow-up shipments. On the whole, the performance of the peak freight season in Europe this year is not very rational, and there is no recovery that everyone expects.
However, if the shipping fee rises, the cost of the seller will also rise, and finally it will be passed on to the consumer to pay the bill. At the same time, for freight forwarders, market fluctuations may cause them to reduce profits or even make losses, but this is not good for logistics companies. When the market is not good, many cross-border logistics companies are in troubles such as disputes, insolvency and bankruptcy. For example, some time ago, a leading freight forwarding company in Shenzhen owed more than ￥40 million, and 170 containers needed to be redeemed by the sellers themselves. Another is that the capital chain of a supply chain company in Shenzhen was broken, so nearly ￥4 million in customs clearance fees could not be paid, and in the end the company had to choose bankruptcy.
All major companies in the market are actively looking for ways to deal with today’s market, such as adjusting freight rates and laying off employees. Small and medium-sized companies may face losses and need to find new ways as soon as possible. During the process of changing the market, each seller must carefully ship and find his own position in the market. This year’s market has not yet reached the peak season. The prices to the US West and US East markets have already risen, and Europe is still fluctuating steadily. Let us wait and see what the market price will be like in the remaining five months of this year.
