Sea Freight Rates Soar Amid Export Boom
Over the past 3 months, the rental price of empty containers has been climbing steadily, from an initial level of less than US$ 1,000 per 40ft container, now up to US$ 8,000, or even US$ 10,000 USD per 40ft container to the UK market.
At the same time, in the plastic industry, the upsurge in sea freight by 3-4 times has also put businesses in jeopardy with decreasing export sales. For example, an Indian enterprise in the Vietnam - Singapore industrial park specializing in the production of yarn has announced closure in December 2020 due to prohibitive shipping costs. Meanwhile, in many other plastic enterprises, the volume of goods exported remains low; yet the number of inventories compared to this time last year is up to 50%.
3 main reasons explaining for a 400% increase in current freight rates:
Increasing shipment of goods from Vietnam to the U.S. and European countries
Insufficient supply of empty containers
The detrimental impact of Covid-19 on businesses
This situation is expected to last at least until the end of March 2021, or even up to Q2/2021, if the disease shows signs of an exacerbation.
Recommendations for businesses within this industry:
Suspend or switch to other transport methods such as aviation, which will have cheaper rates than shipping at this point (Sea freight rates escalate while air freight rates reduce to encourage consumption after suffering huge loss from the pandemic)
In the long run, businesses can consider rail freight transport with stable freight and faster delivery times (Domestic transport can consider this method while waiting for the cooldown of sea freight rates)
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