Ocean freight is conveniently the most popular mode of transportation used for commercial purposes. However, as the world still observes post-pandemic effects and the Russia-Ukraine conflict consequences, inflation has been rising. The price hike is not only limited to specific commodities but the domestic container shipping rates have also been at all times high.
The long-term ocean freight rates between China and the US West Coast are higher than the usual sports prices. This is not something that has been observed since April 2020. Now, a long-term contract cost of carrying a 40-foot long container between China and the USA’s major commercial ports on the West Coast is at least $7,980. The cost is higher than last year’s $3,070 total for the same purpose.
Hence the average price for such contracts shows a 2.7% hike as compared to short-term transportation contracts. Prices for short-term transfers have also gone up by 47% since last year, currently at over $7,770.
Marine Freight Situation As We Move Forward
While rates continue to rise, cargo owners who utilize the transpacific trade lane are also tense about another issue. Despite supply-chain constraints through the pandemic, the main US ports in California carried record amounts of cargo, and union dockworkers solidified their crucial position in the country’s logistics system.
However, the twin hubs of Los Angeles and Long Beach, which handles roughly 42% of all US cargo with East Asia, may find it difficult to recoup as the expiration of labor contracts with more than 22,000 West Coast port workers are near.
The contract involves ILWU (International Longshore and Warehouse Union) and the PMA (Pacific Maritime Association) who are the primary employers, are trying to bring forward a new contract for thousands of dockworkers across 29 West Coast ports.
However, if they fail to reach a deal, supply chain disruptions could have severe effects that would be harder to mitigate.
According to a number of indicators, marine freight rates have declined in 2022 after skyrocketing last year. Thanks to the pandemic’s extraordinary consumer demand, increased inventory levels, recessionary concerns in the US, and lockdowns in China, owing to Covid-19; all have contributed to the decline. However, costs may increase now that China’s economy has opened.