Profound impact on trade from rising freight rates, says research report

December 16, 2021

BEIJING -- Rapidly rising shipping rates compounding crippling supply chain disruptions are straining China's minnow commodities exporters as key industry stakeholders prepare for further challenges, according to the  global banking research and advisory firm, East and Partners, which says elevated freight rates could extend well into 2023.

"Chinese exporters continue to stockpile goods in warehouses as cash flow dwindles, while others endure higher shipping rates amid supply-chain disruptions," the report says.

"Despite exporters voicing their alarm, China's foreign trade performance beat expectations in November with 8.4% growth in exports month-on-month.

"The surge in freight costs and associated expenses is chiefly attributed to a misalignment between increasing demand and decreased supply capacity, coupled with labour shortages and rolling unpredictable COVID restrictions imposed on affected ports now reeling from the spread of the new Omicron variant."

In early November, East and Partners says, 11% of global container volumes were being held up in bottlenecks, slightly lower than August records but well above the pre-pandemic total of 7%nt, according to Berenberg analysts.

Containers may end up waiting three or four more weeks at ports on West Coast of the United States compared with pre-pandemic levels, according to shipping and logistics company Maersk.

The report quoted Frank Xu of Guangdong Smaft Logistics as saying: "Ports in Southeast Asia can be 30% more congested than usual, with ship schedules seriously delayed. There are fewer returning ships, and they are returning more slowly. The effects ripple throughout the supply chain." (ATI).