What is the reason for the continuous increase in sea freight?

According to a Bloomberg report, although the soaring freight rates have brought huge profits to container shipping companies such as Maersk Group and COSCO Shipping Holdings, importers are also facing higher costs that are more difficult to digest. Some companies have raised retail prices, intensifying central banks’ concerns about inflationary pressures, and supply bottlenecks caused by the epidemic are also hindering economic activity.

Bloomberg reported that before the outbreak, most shipping analysts could not imagine that each container from Asia to the United States would be charged $10,000 per container. According to Drewry's data, between 2011 and March 2020, the average freight from Shanghai to Los Angeles was less than $1,800 per container.

Demand from American consumers and companies is one of the reasons for the surge in freight rates, but the shortage of containers is another reason for tight market supply. Container capacity on the eastbound trans-Pacific route is particularly scarce, and the recent outbreak at Yantian Port in Shenzhen, China has hindered imports and exports. At the same time, the scene of a large number of ships waiting to enter Los Angeles and the Port of Long Beach, the largest ocean-going trade gateway in the United States, shows no signs of dissipating.

Shipping experts said that in the context of Western retailers and manufacturers eager to replenish inventory depleted during the epidemic, multiple links in the supply chain were interrupted, causing delays in ports and inland distribution networks and triggering increases in shipping prices.