Reasons For The Increase In Freight Rates

By the end of 2020, freight rates had skyrocketed, a situation that had never been so serious before.

The interest rate is too high, sometimes more than 200% higher than usual. They are expected to return to normal levels after the Chinese New year in March 2021.

We show how freight charges soared at the end of 2020, for example, from Shanghai Port:

What caused the unprecedented rise in freight rates?

Freight rate rise: COVID-19 the outbreak of the pandemic, since the spring of 2020, coronavirus cases have risen rapidly. Because of the pandemic, many importers rejected their plans, which led to a decline in orders from Chinese suppliers in the summer.

This further led to a 5-15 per cent reduction in European port trans-shipment in the second and third quarters of 2020. Importers began to catch up, so orders and transhipment surged in the fourth quarter of 2020. The consequences are delivery delays and congestion, especially in the Central European supply chain.

Supply and demand have declined, as has interest in transport services, and the supply of shipping owners. The ship docked temporarily. There is another aspect to the situation. China's reduced demand for imported goods has led to a shortage of empty containers between Central Europe and the United States.

The forthcoming global economic recovery:

The fourth quarter of 2020 and the first quarter of 2021 are periods of economic recovery and increased international trade. Increased demand for transport services resulted in increased freight costs.

Christmas holidays

The period before and after Christmas is always the peak season for the transportation of goods every year. Consumers want to give gifts to their loved ones, so demand is increasing, especially before Christmas. This situation always leads to the increase and increase of freight volume, but it is different from 2020.

Chinese New Year

Spring Festival is a special festival in Southeast Asia. This period is usually difficult for entrepreneurs working with Chinese partners. production in china stopped; therefore, no new products shipped. The importer accumulates the goods before the Spring Festival.

In 2021, the Chinese New Year will be on February 12 and will begin the Year of the Ox. Since the Lantern Festival is celebrating near the Chinese New Year, the downtime can last up to three weeks.