Anarchy in the Global Freight Market Really Is It Really?
It began during the outbreak of the Corona pandemic, when China closed its factories. Initially, demand also fell in the West, which meant that shipping companies parked parts of their global fleet and orders for new containers went almost zero. He was thinking that a new crisis was coming.
But in the United States and Europe, there has been a desire to buy fraudulent checks, dismissals and financial or financial measures to buy quickly. Since travel, concerts and restaurant visits were limited, consumers opted to upgrade their homes, rave land and so on and invest in new TVs. Result: e-commerce explosion went awry.
The els began spinning and production began, but in March this year, the giant container ship Ever Given was suddenly stuck in the Suez Canal. For about a week, the major transit route between Asia and Europe was blocked, resulting in long lines of ship yachts.
The next blow came in May, when the large container port of Shenzhen’s Yi Yeran Yantan was closed for several weeks due to a corona ruption landing. A one-stop stop occurred in August, when a terminal in the port of Ningbo, south of Shanghai, was temporarily closed. As a result, the container wool went higher and the ipsis was forced to wait for anchoring at sea.
This disruption, coupled with increased consumer demand for consumer goods, caused delays and faster shipping costs for container shipments from China to Europe and the United States.
Shipping cost compared to last year this year
Global median price for $ 40 a container.
Source: Fritos Baltic Index
Here’s the record for high shipping costs – how bad is it?
The cost of transporting forty foot container from China to Northern Europe has doubled in about a year. Last week, the container price on the Shanghai-Rotterdam route was just over $ 14,500 (125,000 kroner), according to Drury’s Container Price Index. Similar pricing developments are dominant on routes from Asia, where much of the world’s commodities are grown, to Europe and the United States.
According to Frito’s Baltic Index, the global median cost of transporting containers by sea is now less than R $ W $ 10,000, compared to just R $ 2,000 and $ 2,000 a year ago.
Problems continue though traffic should be running normally?
There is imbalance due to both the lack of containers and shipping. Container delivery time from Shanghai to Chicago, a standard for global delivery, has been delayed from 32 to 72 days this year, reports TT. At the same time, late summer and autumn is a critical time for merchants who want to stock their BlackRock Black before other Black Friday and Christmas shopping. Since everyone wants to order their stuff at the same time, there are lots of uss stuff about empty containers and fake neck in the already tight system. Many merchants try to carry goods through China via air and land but not enough to cover shipments. About 90% of the world trade is made by sea.
How are Swedish businesses affected by these problems?
Many companies are witnessing broad delivery issues. H&M announced in its latest quarterly report that autumn clothes will not arrive in stores on time. At Ikea, deliveries are empty as a result of late delivery. Seven to ten e-retailers say they have problems with supply of goods in the postmodern e-barometer.
For many merchants, shipping problems are a real headache because Christmas shopping is such an important period of the year. Sitting down with empty inventories will be a risk as a disaster is expected to make up a significant portion of this year’s sales from the end of November to the new year. Last year, the turnover for Christmas sales was over SE and SEK 80 billion, and for retail, December sales accounted for 10% of total annual sales, according to Statistics Sweden. For toy retailers, it makes up 22% to 22%, and in jewelry and cosmetics, 15% of sales this year are in December.
Along with the delay, wipping shipping costs mean that merchants’ margins have been brought under. Particularly impressive are the companies that sell large appliances such as furniture, building materials, bicycles and consumer electronics. Shipping cost per unit will be significantly higher as less products will fit per container.
And how are users affected?
Many people may already have experienced the crisis of livestock in their daily life. Either by buying products online that have taken weeks or months to deliver, or through empty shelves and messages that “this product is temporarily out of stock.” In the short run, this trend will continue. It can be tricky to find Christmas gifts that have urine – it may be more expensive to buy toys – a discount that has become commonplace to consumers during the Black Friday many retailers would not have been so attractive if they were retailers. Not really back.
Is there a solution in place?
In recent weeks, global freight prices have dropped, which can be interpreted as light at the end of the tunnel for nail traders. But container prices are still on record highs, and most observers are convinced that the problems will continue at least until the first February of the Chinese New Year. So many factories temporarily shut down their operations, which allow the shipping system to catch up. But many companies are already flagging them, saying they expect shipments to continue well into 2022.
Sooner or later, supply and demand will meet, but this mall will fall to the lowest price level as the outbreak becomes more uncertain. Fuel costs help fuel costs and tight environmental needs and contribute in the long run.
The consequences can be a material crisis in the long run?
If higher shipping costs last longer, many companies will be forced to pay their prices. This in turn can help inflation and inflation and interest rates rise. Already, inflation is rampant in the United States and Europe, and in a DNA interview, financier Christer Gardell recently warned that Roux Bank may be forced to raise interest rates and many think at the productive level before it even comes. Due to high cost increases.
The crisis has also brought about trade, depending on the weakness of global trade and the Western world’s dependence on Asian products. Therefore, many companies are now looking at the future barriers to spreading their product geographically to become less vulnerable. For example, furniture company Mio, whose CEO Björn Lindblad says they are looking at manufacturing near Sweden. But moving factories from China to the continents does not happen overnight, and may also mean increased costs if the greater part of production should be in countries with higher wage levels.
It is clear that global trade has been hit by a “perfect storm” that has long-lasting consequences.
Read more: Ikea warns of ongoing product shortages