BEIJING: Sea shipping rates for goods leaving China are likely to drop next year as new container ships enter service, according to carriers at a major trade fair in Shanghai.

Freight rates have fallen by up to 90% in the past year after reaching unprecedented highs during the pandemic, and are expected to stabilize in the short term.

Over 200 new ships are to be delivered to freight operators over the next two years. Ships with a total capacity of 2.34 million 20-foot equivalent units (TEU) will be delivered in 2023, followed by an additional 2.83 million TEU in 2024.

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In comparison, 1.1 million TEUs were shipped this year.

“The shipping industry is concerned about a further drop in shipping rates,” said Kevin Gao, senior sales manager for Hapag-Lloyd (China) Shipping, an exhibitor at the China International Import Expo (CIIE). "The delivery of new ships will almost certainly exacerbate the problem of overcapacity."

Some cargo operators participating in CIIE, the world's largest import trade fair, are hoping to increase trade volume if China overcomes its strained ties with the West and buys more foreign goods.

According to Simon Sun, general manager of Pacific International Lines' Shanghai branch, Beijing's Belt and Road initiative, launched in 2013 by President Xi Jinping to strengthen China's trade ties with 65 countries, has been developed for machinery and equipment such as solar panels. Creating demand abroad.

This could help support freight prices as they are under pressure from capacity additions.

“We anticipate that shipping rates [for containers] will remain stable in the coming months,” he said. "At current levels, ocean carriers should be able to maintain profitability."

The Singapore-based airline is using CIIE, which is being concluded Thursday, to increase brand awareness, build relationships with new customers and drive sales.

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According to Freightos, a global freight booking platform, the cost of shipping a 20-foot equivalent container from Asia to the US west coast was $2,479 last week, down 87% from the same period in 2021.

China emerged as the world's first major economy from the coronavirus lockdown in June 2020, regaining its place as the world's factory and fully churning out goods to meet global demand.

However, the shortage of containers at major ports across the world was causing problems for exporters. They either had to pay thousands of dollars more to reserve a shipping location immediately or wait several weeks for their goods to be delivered.

During the peak season for sea transport with China-made goods bound for the Americas and Europe before Christmas in August 2021, container slots were often contested by dozens of exporters who ship their goods at ten times the normal freight rates. were ready to pay. ,

Despite significant price cuts, the current rate is almost double what it was before the Covid-19 pandemic.
"China's trade with foreign countries is the most worrying," said Xiong Hao, assistant general manager of Shanghai Jump International Shipping.

"Shippers are doubling down on their efforts to attract more cargo owners, and to keep rates stable they must avoid a side effect." Sun said good cost management, including efficient fuel use, will be key to maintaining profitability for carriers if shipping rates decline.

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CIIE, which was launched in 2018 to promote Chinese companies' purchase of foreign goods and reflect the country's desire to open up its vast market, has around 3,000 exhibitors showcasing their goods and services.