General

Disturbances in the global supply chain caused by the epidemic continue. The price of container shipping has soared to ten times that before the epidemic, which poses a huge threat to the recovery of the global economy.

The chaos in container shipping began in the second half of last year. As the epidemic spreads across the world, major shipping companies have reduced shipping schedules. But as countries implement large-scale fiscal stimulus and normalization of home office work, consumers have begun to order products online at an unprecedented speed. The severe imbalance between supply and demand has caused the price of container shipping to soar.

According to data from freight tracking company Freightos, the unit transportation cost of 40-foot containers from China to the West Coast of the United States has soared to $15,800 at the end of July, which is ten times the price before the outbreak.

Regarding the current freight rate situation, Philip Damas, the managing director of Drewry, a maritime consulting company, said that the spread of Delta virus has slowed down the turnover rate of global containers and further increased the increase in freight rates when the freight rate has climbed to the highest in history. The typhoon in the coastal area also affected the freight rate:

The global container shipping industry has become a chaotic and in short supply of sellers' market; we have not seen this happen for more than 30 years.

Lars Mikael Jensen, head of global ocean network at Maersk, the world's largest container shipping group, also holds a similar view. He warned that since the emergence of the Delta virus, global shipping conditions have not improved at all, and the maritime transportation network is "still very tense":

It only takes one small thing to get back to the starting point. This may pose a huge threat to the recovery of growth in the global economy.

Supply disruptions have prompted larger manufacturers and retailers to consider strengthening their supply chains by increasing inventories, double purchasing and even relocating production back home. But for many small companies, the supply interruption is enough to bankrupt the company.

John Glen, chief economist of the Chartered Institute of Procurement and Supply, said that now is a critical time for supply to Europe during the Christmas season. The explosive rise of container freight rates and supply delays will have serious consequences. Seasonal commodity shortages will push up inflation, "and this problem will not disappear anytime soon."