January, 2021

Freight costs have been rising at accelerated rates around the world, especially for vessels shipping out of China. The complications brought on by COVID-19, combined with the new construction of modern shipping vessels equipped with larger carrying capacities, have created an overall lack of available personnel.

Each country has its own regulations for COVID-19, and shipping vessels must adhere to all of them at each stop they make. With fewer personnel and new required regulations constantly shifting, shipping has become a much more difficult process over the last few months.

Less equipment is available for shipping due to the new construction and containers that are shipped are returned empty to absorb the cost of the trip. Because of this, many large companies such as Costco, Samsung, and others have pushed their yearly shipping contracts back to avoid these hiccups. 

Rapid shipping is currently only being used on a case-by-case basis, primarily reacting to customer demand from COVID-19 needs. If consumer demand for a product has increased during the pandemic, manufacturers are simply going forward with their assigned quotas from previous contracts to ship everything as SPOT.

Now that the holiday season has ended, most manufacturers are likely to wait until the lower ocean freight costs begin setting in. This will most likely lead to the cost of steamship lines dropping to regular levels during Q2 as staffing and construction returns to normal.

However, depending on how COVID-19 evolves in the coming months, things may change. If the situation does not improve, shipping will likely require a surcharge, though the rates are fixed, with caps on the maximum amount they can add.

With Chinese New Year coming up soon, it is our expectation that ocean freight will start to decline, as vessels that sail out of this timeframe will come back to China Pier for April 1st, when the new freight contracts take effect.

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Written By
Sean Farley