The price of shipping goods from Asia to Europe has soared over the past year. But, over recent months, the rise has been particularly dramatic, says an article published on a financial time website.
More uncertainty in shipping volumes
Here’s a chart put together by Xeneta, an outfit that specialises in data on what it costs to book space on one of the 40ft containers across the world’s oceans, 
That’s about a $6,000 rise in shipping costs per container since the end of April.
Not only has it become far more expensive to ship goods across the Indian Ocean and up the Suez Canal, the service has become poorer. Emile Naus, a partner specialising in supply chain management at consultants BearingPoint, says exporters are full of complaints:
We have had numerous reports that containers are being left off vessels even after paying the high rates. This has certainly caused some customers to over supply products, to try and maintain stock levels in Europe.
The result is that there will be an issue with warehouse capacity, and the bullwhip effect this will undoubtedly cause will actually lead to more uncertainty in shipping volumes well into 2022.
Asia to Europe
According to project44, a data logistics outfit, delays on the China to Europe routes are rising too:
In many manufacturing industries, the hurdles to making and distributing goods seen during the earlier days of the pandemic seem to have been overcome. Mark Dow, an independent macro trader who has a large following on Twitter, told us on last Friday’s Twitter Spaces that he now thinks the US has reached a point where rising Covid-19 numbers would do little to offset the economic rebound. The reason being that, by this stage, businesses have learnt to cope to the point where they could easily stomach the impact of rising caseloads.
Yet what we are seeing on the Asia to Europe route may reflect broader inflationary trends across the market for ocean freight, especially since prices for freight going from East Asia to the US West Coast have also picked up in recent months.
Indeed, month on month, the rise in freight costs has been 20 per cent – higher than for the European route (though the cost of shipping a 40ft container from Shanghai to LA is nowhere near as expensive as the journey from China’s East Coast to Hamburg or Rotterdam). Data, as before, via Xeneta:
Reshoring
Lack of capacity remains an issue. But analysts think that one of the factors driving the trend of late is a rise in Covid-19 cases in China. Here’s Josh Brazil, vice president for marketing at project44:
The fact that ships remain delayed and now Covid variant outbreaks in major Chinese manufacturing hubs are on the rise, indicates that there may be far-reaching down-stream consequences going into Black Friday and holiday shopping seasons . . .
…One of the few givens in 2021 is endemic delays, and the fact that conditions can change almost overnight.
Longer term, analysts increasingly think that we’ll see reshoring, with businesses saying they’ll shift supply chains closer to home. Here’s Naus’ take:
A combination of increased shipping costs, combined with the risks that are embedded in long lead times and the fear of increased trade restrictions, is now forcing the re-evaluation of sourcing decisions, potentially opening up production closer to the market.
Reshoring is easier said than done though, so we will be keeping a close eye on whether companies are really putting their money where their mouth is.
Summary
- The price of shipping goods from Asia to Europe has soared over the past year.
- We have had numerous reports that containers are being left off vessels even after paying the high rates.
- According to project44, a data logistics outfit, delays on the China to Europe routes are rising too.
- Reshoring is easier said than done though, so we will be keeping a close eye on whether companies are really putting their money where their mouth is.
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Source: financial time
