In this year's spring, the sudden surge in maritime shipping prices has posed a significant challenge for many foreign trade enterprises. Traditionally, the period from April to May each year is considered the off-season for foreign trade activities, during which maritime shipping costs tend to be relatively low.

However, the situation this year has presented a starkly different picture. Transportation prices on many major routes have soared, and some enterprises and freight forwarders are under unprecedented pressure, making the task of finding containers to transport goods a difficult one. What has caused this situation? Is the imbalanced development of the global economy the driving force behind it?

Shipping route prices skyrocket

At the end of this year's spring, the global maritime shipping market has experienced intense turmoil. The booking situation has become unimaginably tense, especially on routes to Europe and America, where the situation is particularly severe.

Many shipping companies have keenly seized this business opportunity and issued announcements on June 1st this year, clearly stating a significant increase in freight prices. Such a major policy adjustment undoubtedly caught the vast majority of foreign trade enterprises and freight forwarder companies off guard.

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In detail, the freight rates for routes to the United States have generally increased by about $1,600, including peak season surcharges. Similarly, the upward trend on European routes is by no means inferior, with an increase ranging from $1,000 to $1,200.

It is worth noting that such price adjustments have caused the freight rates on European routes and West Coast U.S. routes to both break through the $6,000 mark, and the East Coast U.S. routes have soared to an astonishing level of over $7,000. The rapid pace of price increases and the high level of increases undoubtedly impose a heavy cost burden on foreign trade enterprises.

What is more severe is that the situation has not stopped there. Since the last week of May, due to the increasingly tight supply of space, freight forwarder companies may not be able to ensure the acquisition of the required space resources even if they are willing to pay an additional fee of $500 to $1,000.

Now, shipping companies have begun to decide on the allocation and pricing strategies of space based on the historical transaction records of customers. It is clear that the market environment has already shifted to a seller-dominated situation.Against this backdrop, the surge in spot freight rates and the disregard of contracts by shipping companies have sparked strong discontent among Nordic shippers and freight forwarders. They are grappling with the rapid increase in spot freight rates, a level of instability that has put unprecedented pressure on the entire industry.

In recent weeks, Drewry's World Container Index (WCI) has shown a weekly increase of up to 20% on the Shanghai to Rotterdam route, closing at $4,999 per 40-foot container.

However, the actual spot market prices are far higher than this figure. Sources have revealed that the actual spot prices range from $6,000 to $7,500, with some carriers even stating that their prices will reach $10,000.

This is all caused by a combination of tight ship supply and high trade demand. A severe shortage of containers has occurred at major export hubs in Asia, which has had a significant impact on secondary trade routes.

What's worse, carriers are now more willing to carry high-priced spot cargo rather than contract cargo, a practice that has angered many long-term cooperative customers.

A European import manager stated that due to the significant increase in freight rates, they may suspend shipments after the current bookings are completed. He explained, "Carriers are now primarily focused on profit. We are dealing with the cargo on our production line, and once these goods are shipped, shipments will be suspended, and we have already notified our suppliers and partners in advance."

This increase in ocean freight rates not only brings more workload to freight forwarders but also puts many small and medium-sized foreign trade enterprises at risk of losses.

The tight supply of space and containers often leads to the cancellation of booked space by freight forwarders, which increases their work pressure; foreign trade enterprises may face cargo backlogs, inability to deliver on time, thus increasing the risk of breach of contract.

Overall, the current ocean freight market is full of uncertainty and challenges, and the continued increase in freight rates brings greater pressure to the global supply chain.Reasons Behind the Surge in Shipping Routes' Prices

This year, the container sea freight prices to Europe have seen a sharp increase, with many attributing the cause to the situation in the Middle East, particularly the activities of the Houthi rebels. However, objectively speaking, although such factors do have a certain level of influence, they are far from causing the entire industry's prices to soar to an unbearable level.

In fact, the situation at the port of Singapore more clearly reveals the current predicament. Despite Singapore's considerable distance from the continents of Europe and America, as a key node in the global shipping hub, it is currently facing an extremely severe congestion issue.

Similarly, the logistics transportation prices in the western coastal areas of the United States have also shown an extremely sharp increase, and this phenomenon is not directly related to the political turmoil in the Middle East.

Looking at the recent data, on June 4th, the container shipping index, which is the freight rate to Europe, surged by more than 9% in a single day. What does this indicate? It indicates that there is now a significant need to replenish the inventories in Europe and America.

Since 2022, the United States has actively implemented monetary policy tightening. The policy orientation originally aimed at curbing import demand has led to unexpected consequences in the second half of the year—the import volume did not decrease but instead showed a rebound.

In previous articles, I made a bold prediction that this interest rate hike would have a significant impact on the supply chain of the U.S. domestic manufacturing industry. From a long-term perspective, the negative effects it may cause could exceed the widespread impact during the COVID-19 pandemic.

As interest rates gradually rise, the U.S. manufacturing industry is gradually entering a period of decline, and many goods that could have been produced domestically now have to rely on imports.

By June 2023, the total import volume of the United States continued to climb, a phenomenon that attracted the high attention of then-President Biden. He was concerned that this move could pose a threat to domestic manufacturing, so he decided to take measures such as imposing additional tariffs to address it.However, this strategy has further harmed the American manufacturing industry, as the United States lacks a complete industrial chain. Once certain key materials are missing, the entire downstream industry may come to a halt.

In this situation, the United States has imposed additional tariffs on Chinese finished products. In response, China has restricted the export of materials to the United States. Without Chinese materials, the American manufacturing industry is even worse off.

As a result, Western countries have no choice but to increase the import of complete equipment, even though the continuous increase in tariffs still cannot solve the problem.

The significant increase in transportation costs has put heavy pressure on many enterprises engaged in foreign trade business. Once foreign trade activities are reduced accordingly, the impact on our country's domestic economy will become more intense.

Nowadays, the manufacturing industry in the United States and Europe shows obvious signs of decline, and the demand for imports of various goods has soared. Therefore, it is necessary for us to unblock and improve the transportation route system to ensure that the domestic market's demand for Chinese goods can be fully met.

Improving transportation capacity is indeed one way to solve the current problem, but in the long run, the root problem still needs to be solved.

If the political focus around the world can be smoothly shifted to the Chinese mainland, then under the leadership of our country's innovation, the economic rise of ASEAN, the Middle East, and Russia will also be imminent.

At the same time, the economic development of Europe and the United States may correspondingly enter a short period of stagnation. In this way, a comprehensive global economic adjustment can be achieved.

In this case, the current difficulties faced by maritime transport can find a fundamental solution, and global trade flows will become more smooth.High-end Industry Chain Transfer

In recent years, the US-China trade war has been heating up, especially with the United States imposing heavy tariffs on Chinese imported goods. This has not only caused significant market fluctuations but also put unprecedented pressure on ports around the world.

To cope with this situation, many companies have started to import in large quantities in advance, resulting in severe congestion at US ports.

However, if we look at a broader perspective, we will find that the market potential in Southeast Asia and the Middle East is astonishing.

Imagine, if the ASEAN region, with a population of over 600 million, could surpass the scale of the United States with a population of over 300 million, or if the consumption capacity of the Middle East's 400 million people could surpass that of the European Union, then there is no doubt that the global economic center will gradually shift towards Asia.

To promote the continuous decline of the European and American economy, the most effective strategy is to attract their high-end industries to migrate to our side. For example, we can actively strive to locate the semiconductor industry in China and relocate some mid-to-low-end and highly polluting electronics industries to the Southeast Asian region.

For instance, Indonesia has always wanted to produce nickel on its own. Chinese companies can go there for joint ventures, which would help Indonesia and also alleviate our own industrial pressure.

Speaking of the global layout of industries, we should consider tighter economic binding with ASEAN, Russia, the Middle East, and even Latin America.

In the past, our country was mainly responsible for exporting "Made in China" products to every corner of the world. Now, we should promote "Chinese industrial capital" to go overseas, take root and thrive globally.

Under the current situation, we urgently need to promote the gradual expansion of traditional industries overseas to reduce domestic energy consumption and traffic congestion, while helping our partners achieve prosperity and development.Such measures not only contribute to enhancing the unity and cohesion among nations, but also lay a solid foundation for consolidating our country's international economic status.

In terms of the current challenges faced by the maritime industry, relying solely on increasing capacity is not a sustainable solution.

We should adopt more meticulous and effective strategic planning, orderly relocating some traditional export-oriented industries to areas where we can exercise military control.

By implementing transformation and changing our export product structure, with a priority on developing mid-to-high-end manufacturing, we can ensure the maximum security and smoothness of our maritime shipping channels. Even in the face of potential blockade measures by the United States, they would not be able to inflict a fatal blow on our country.

We must pay great attention to trade with non-American regions, carefully maintaining it as if it were our own eyes.

However, for routes to the United States, it is believed that the U.S. government will naturally take corresponding measures to protect them, so we need not worry excessively.

Looking at the current industrial chains in Europe and America, they have been hit by both high interest rates and supply chain issues, and they have already begun to struggle. There may be more shortages of supply in the future, and the situation may be similar to what it was before the collapse of the Soviet Union.

At that time, the Soviets were scrambling to buy goods, and the West used this to criticize the planned economy. When empty shelves also appear in European and American supermarkets, it is unknown what they will say.

In this situation, we should further strengthen the security of trade routes with friendly countries, reduce our dependence on Europe and America, and accelerate exports to other regions in Asia, Africa, and Latin America.

Such actions are not only for our own interests but also for the long-term healthy development of the global economy.