Spot rates rise with no end in sight, the EU joins in the struggle for de minimus equality, and a report from DHL spotlights global consumer habits
Greetings everyone,
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Prices are rising due to red sea workarounds, but ocean spot rates aren’t the only things growing. Air freight continues to rise throughout East Asia as megabrands Temu and Shein swallow up massive amounts of capacity to ship to consumers all over the globe.?
US crackdowns on logistics seem to mostly be an irritant for freight forwarders, although aimed at creating a more competitive environment for non-Chinese sellers.
Plus, DHL’s worldwide survey gave us insight into stats for 2024 e-commerce.
What else happened in June?
Let’s get into it.
Maersk expects freight rates to keep getting higher through the rest of the year.
Maersk has just raised it’s yearly forecast for freight rates, due to the continuous effects of Red Sea rerouting and related port congestion in Asia and the Middle East.?
Through the end of 2024, Asia-US spot rates are expected to reach $6,250 per FEU — an increase of 50 percent just since the end of April. Other routes originating in the far east are seeing similar spot rate hikes.
With capacity tied up and no end in site for Red Sea rerouting, we can expect prices to continue to climb through at least the end of the year, not to mention further shipping delays.
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De minimus drama goes global
Cheap imports have surged around the world, and the US and EU are making changes to get a handle on things.?
The US has been cracking down on Chinese online megaretailers benefiting from advantageous laws allowing them to ship into the US tax-free.
Now, the EU is following suit. The European Union is drawing up plans to impose new duties on cheap goods sold by foreign online retailers, purportedly targeting Chinese brands like Shein, Temu, and the like.?
Why the sudden crackdown on cheap imports? The number of goods imported into the US and EU in the past couple of years has drastically grown from 134 million in 2015 to over 1 billion in 2023.?
As of right now, lawmakers are in the early stages of drafting legislation to reduce the amount of cheap goods coming in tax-free, but it will take some time before laws change. Attempted crackdowns have been challenged by limited customs resources, so the effects of recent scrutiny will likely take some time to make any real effect on shippers.
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How long will Shein and Temu hold out on footing the airfreight bill?
The success and growth of companies like Shein and Temu can be attributed to extremely low costs…but how can they offer such low prices and still make their margin?
The answer is that they are probably not making much margin now, as they have chosen to offer free shipping to continue to lure customers to buy more.?
One part of that is footing the bill for airfreight shipping. While Temu customers pay next to nothing for delivery, the brand buys up as much air capacity as it can, pushing up prices for the rest of the brands shipping out of Asia.?
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Expect prices out of East Asia to continue to grow this summer and autumn.
DHL released an online trends shopping report. Here’s what it said
A recent report from DHL on the online shopping habits of consumers across 24 nations showed us what we already knew: shoppers love free delivery and balk at high shipping costs!
Of course, the report offered much more insight than that, as it goes into the varied importance among consumers in different countries of things like discounted shipping, shopping apps, and guest versus account check-out habits.
One of the most interesting insights was that across the board, the number one reason that customers were abandoning their carts at checkout was high shipping costs. On top of that, customers sited a preference to pay a higher price for the item and receive free shipping.
The takeaway here? Online shoppers balk at surprise costs at checkout, so bake shipping into the price of the item when you can and opt for free or low-cost shipping.
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Reports trying to pinpoint whether brick-and-mortar is dying or coming back missing the point
More brick-and-mortar stores were opened than closed in 2022 and 2023, so why is everyone saying that in-store shopping is dying out?
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The truth is that brick-and-mortar stores are still quite successful, but the part they play in modern retail has changed with the growth of e-commerce.
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While many try to pin them against one another, the two channels play off one another. Nowadays, the store may function not only as a place for customers to browse and purchase, but as a center for local online deliveries, and even as a click-and-collect pickup location.
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?If done right, a multichannel sales experience provides unique value adds to customers that only doing one or the other cannot achieve.?
From CBIP
We’ve published the following blogs this last month. Give them a read if you have a couple of minutes.
Want daily updates from CBIP? Make sure to follow me via Twitter (@Nbartlett_CBIP) and CBIP (@CBIPLogistics) for thoughts and conversations on the industry every week.
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Until next month,
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Nick Bartlett