The cost of shipping a container full of products from China to the United States has surpassed $10,000, as the world's largest economy continues to absorb imports amid sluggish recovery from the epidemic that swept through Europe and Asia.
According to the Drewry World Container Index published on Thursday, the spot pricing for a 40-foot container from Shanghai to Los Angeles climbed to $9,631, up 5% from the previous week and 229% from a year earlier. A composite index covering eight key trade routes increased by 333% year on year to $8,796. Drewry stated that it anticipates additional rate increases in the next week.
While the rising rates benefit container lines such as A.P. Moller-Maersk in Copenhagen and China's Cosco Shipping Holdings Co., they make it more difficult for importers to bear increased expenses. Some are increasing retail costs, contributing to the rising inflation that concerns central banks, while others are stifling economic activity due to Covid-related supply constraints.
In late May, the cost of a container from Shanghai to Rotterdam surpassed $10,000 and has continued to increase. According to Drewry, it hit $12,795 this week. This is approximately 600% more than a year ago.
What Accounts For These Unfathomable Rates?
Prior to the epidemic, the thought of $10,000-per-box costs on the popular Asia-to-US route would have been unimaginable, but a lot of things have changed in this pandemic. Between 2011 and March 2020, the average cost of transporting a container from Shanghai to Los Angeles was less than $1,800 per container, according to Drewry statistics.
While increased demand from American consumers and businesses is one factor contributing to the rate increase, container scarcity remains another factor contributing to the tight market.
Container space is particularly tight for eastbound transcontinental cargo, with Covid outbreaks recently slowing both exports and imports at a port in southern China. Likewise, a backlog of vessels awaiting entry into the twin ports of Los Angeles and Long Beach, California – the United States' primary gateway for ocean-going trade – showed little indication of ebbing.
According to officials who monitor port traffic, the number of container ships parked in San Pedro Bay totaled 18 as of late Tuesday, roughly double the backlog from two weeks ago. Since late last year, the backlog has continued, peaking at roughly 40 boats in early February.
According to the Los Angeles port, the average wait time for berth space was 5.3 days, up from 4.6 days in early June. This figure peaked at about eight days in April.