Will Freight Costs possibly be stable as more carriers join in Q4?

In 2021, freight cost becomes the main barrier for the international seafood business. The main purchase is coming from the USA and the EU market to China. That’s why the lines to these areas are extremely high. But the good news is more and more carriers are ready to join the container market for these hot lines, and the freight cost may be stable or decrease in Q4, 2021.

Freight review- Asia and the US West/North Coast

For the freight cost in 2019, the average level is about USD 1300.

North America West Coast to East Asia is USD 2200.

East Asia to North America West Coast is USD 3800.

Then in 2021, August, Here is the price.

For the freight cost, the global average is about USD 10000.

North America West Coast to East Asia is USD 9300.

East Asia to North America West Coast is USD 17000.

We can see that the freight cost is increasing so crazily in these two years. As for the reasons, we all know it’s because of the pandemic. In March 2020, the freight cost was stable and decreased because the peak purchase for Christmas, New Year, and Chinese new were almost over. However, the blockage of the Suez Canal by the container ship Ever Given made the world logistics a mass. From that on, the freight cost continued increasing until now.

Reasons for the increase:

  • Lack of labor in the container ship
  • Lack of containers
  • International business trade booms, especially to the USA

Freight cost terribly affect the frozen seafood business

As we all know, for the seafood industry, most of the seafood business volume is usually for common fish, and they are not expensive like panga, tilapia, vannamei, etc. The freight cost increased so high that even in some orders, the freight cost is higher than the product itself, like oilfish and mackerel. People are struggling to do the seafood business under this high freight cost.

Freight cost shows a trend that finally it is stable.

Many shipping lines are cutting their low-efficiency lines and joining the most profitable lines like Asia to the USA and Europe. In 2021, CU Lines, BAL Container Line, and Neptune, and Alibaba all expand their shipping lines for Asia, Euro, and North America. This month, a Singapore company Sea-lead has also joined its container ship PINOCCHIO (Pinocchio). It is fully loaded with more than 1,000 containers. The container ship departs from Guangzhou Port Nansha Port Area Phase III.

From August 08- August 24, Sea-lead also started a new line for Asia and the US west coast with six container ships of 30850-36630 ETU. This line is a Biweekly shift operation line.

From August 08- August 24, the CU Lines started a new line from Guangzhou to Long Beach, with six containers ships of 25500 TEU. And this is a weekly routine line.

Transfar shipping(a Singapore logistic company) will also start a new line from Asia and the US west coast in October.

With new freight line companies and continuous additional ship schedules, the freight from China to North America West Coast has recently shown a downward trend. Just two weeks ago, the freight cost exceeded USD 20,000 for the first time in history. However, with other new routes and additional ship schedules gradually working on in the whole industry. Last week, the freight rate plunged rapidly.

Freight cost recently shows the tendency for descent

On August 06, the global average freight cost is USD 10380, On August 13, USD 9568, on August, USD 10024. This is the first time in the last two years, and the freight cost has this big descent. At the same time, Shipping rates on the West Coast of North America have plummeted by 15% from US$20,000 to US$15,809, then bounced back to 17500. So averagely, only in these two weeks, the freight cost decreased around 3%.

September and October are the target month for the Christmas purchase and new year purchase. Usually, it’s impossible to see the descent of the freight cost. Then this 3% descent is a signal to the international business industry, the current freight price has reached the peak tolerance of the market, and the room for the next price increase is very small. 

Freight cost strongly bounced back, it’s hard to predict the trend now

All data before August 20 show that the freight rate will be stable. But on August 27, the freight rate has a sharp increase just bounce again in a week.

On August 27, the global average freight cost is USD 10324, increased by 3%

East Asia to the North America west coast is USD 18425, increased by 5%

East Asia to the North America east coast is USD 20057, increased by 5%

With this strong bounce back, it’s hard now to predict how the price will be in the future. Maybe at the end of September, we will see more clearly how the price trend will be in Q4.

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