Why a New Round of Freight Hike?

When we returned to work on 6th May after the May Day holiday, the factory reported that the cargo to the East S. American port was ready, so we arranged the booking immediately. At the same time, the cargo to the Asian port was also ready in accordance with the shipping plan to contact the shipping agent to start the operation.

The agent's quotation for a 20F container to the South American port is US$8850, and to the South Asia port is US$2170!

In my previous quotation, the freight was US$5,700 and US$950, respectively.

I wondered if the agent had made a mistake with these two exaggerated prices.

In the next two days, the agent couldn't find an optional ship or cheaper tariffs and was even rejected by a smaller shipping liner on the grounds that there was no space available.

During the same period, many of my foreign trade friends complained that this year's business was not good enough. At an earlier time, the relevant authority announced that export data was not pretty. Then, how come this freight rose so bizarrely?

More surprising is that four major shipping companies jointly announced a new round of shipping fee and surcharge increases starting from 15 May.

What is also incomprehensible is that there is no news or reports on the internet about the change in shipping rates after mid-April.

The recent explanation comes from a short article forwarded by a friend on LINKEDIN. The main reason is that BYD's investment in Brazil is in urgent demand for a large number of containers, and secondly, the U.S. tariffs on a certain country led to the panic of stocking up. Yesterday, the agent said, "The news reported a large exporter increased shipment volume." That may be the first reason. This also explained the surge in shipping costs from the Asian ports to North and South American ports.

Other tiktok bloggers in the freight forwarding industry are also trying to find the factors that led to this bizarre price hike:

1 - The ongoing Red Sea crisis with no positive outlook has created a backlog of ships at sea and in certain ports, resulting in wasted capacity;

2 - The Panama Canal's dry period affected the blockage of east-west passage in the Americas, with a large number of ships waiting;

3 - the collective synchronisation of shipping companies to increase prices in the low season of insufficient demand, which can force a long-term contract, as well as the tacit agreement to take the opportunity to taste the sweetness of the price increase again.

4 --- China's manufacturing transfer to Central and South America (particularly Mexico and Brazil), the demand for shipping space slightly increased and concentrated;

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At present, the agent still replies that the shipping spaces are overbooked, the containers are very likely to dump, and the freight quotation rises every week, and even varies from day to day.

Whether we can understand and accept it or not, forwarder agents and export companies are suffering sleepless nights and are still struggling to find a rhythm.

The figures already illustrate that the overall export situation in China is not optimistic, and the demand for containers is far from enough to support the shipping liners' continued price hikes. Some shippers have already decided to postpone shipments, and only export orders with established schedules are now tearfully suffering such inexplicable losses. Some forwarding agents have speculated that this wave of freight increases will only last until mid-June at most.

Each route is affected by various degrees, so we need to pay more and closer attention.

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