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Chinese Shipping Rates Decrease

Chinese Shipping Rates Decrease

Multiple Factors Lead to Lower than Expected Shipping Costs

The anticipated rush of cargo following the recent reopening of Shanghai has failed to materialize. The Chinese city had been subjected to a months-long lockdown, the likes of which the west had not seen since the initial days of the Covid-19 pandemic. With business leaders like Elon Musk championing the economic and industrial might of Shanghai, a flurry of activity was expected to return the city to its full capacity. However, current economic hurdles have subdued demand. A positive side effect is a shipping rates decrease.

Shipping rates from China have decreased dramatically in the last few weeks. The dual threat of inflation and high gas prices leaves retailers expecting lower consumer demand and cutting back orders. Industry insiders are not expecting a pick up in demand until Q4 2022. The summer of 2022 is one of the best opportunities in the last several years for those looking to ship freight to and from China.

shipping port container containerships freight forwarding

High Gas Prices Lead to Conservative Spending

The historically high gas prices being faced by the United States and the rest of the world are the result of many different aspects, despite the desire of political commentators on both sides of the aisle to point a finger at singular issues.

While the United States received less than 10% of oil imports from Russia, the percentage was significantly higher in Europe. The economic blockade of Russia for their invasion of Ukraine is leading to an energy squeeze filtering from Europe to the entire world. As of the writing of this article, Saudi Arabia has been capping their oil production (although, a new report optimistically suggests OPEC+ might hike supply soon).

While there is the capability of digging new domestic and international oil wells, gas executives are hesitant to invest in long term projects with the expected rise of electric cars in the next decade and the recent memory of negative trading prices during the height of the pandemic. However, even experts are not prepared for the sky high trajectory of average gas prices. On June 14th, the New York Times reported the expected average price for the month of June 2022 was $4.59; less than a week later the average price was $4.98.

The demand for gas in America has only increased, following workers return to offices and the arrival of the summer driving season. Many Americans are opting for experiential vacations instead of physical goods having been cooped up inside. Consumers looking to tighten their belts have suspended home renovations and canceled subscription services. 

united states port shipping containers cargo rates gas prices energy

Bear Market Helps Shipping Rates Decrease

The other major factor driving down demand is the arrival of a bear market. Defined as a decline of 20% or more across the entire stock market, nearly every sector is suffering (with the exception of energy stocks). The drop is acutely felt by brands like Wal-Mart and Target in the retail sector. With pressure from shareholders to find cost cutting measures and consumer demand down, these retail giants are not placing the same level of orders from Chinese factories.

Ships looking to make up the gap are enticing other clients with lower rates through Q2 and Q3 2022. Any proactive companies will be able to take advantage of this unique situation after a fraught two years of lockdowns, port backlogs, and supply chain disruptions.  

How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

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Shanghai Reopens; Work to Lessen Backlog Begins

Resuming Full Production Not as Easy as Flipping Switch

Shanghai is lifting their extreme lockdown and not a moment too soon. While originally intended to be a two-phase lockdown lasting one week, the near total lockdown of Shanghai stretched to two months before being lifted on June 1st. Chinese citizens are relieved after a frightening and confusing time.

shanghai port china freight forwarding global supply chain biden putin ukraine lockdown China has enforced the most stringent restrictions worldwide since March 2020. The goal of reaching community zero-COVID has frustrated Shanghai, especially. Citizens who had been separated from family and basic needs were trapped by muddled messaging from the government. Amid positive trends in cases, “some Shanghai districts tightened restrictions on movement, and even in neighborhoods that met criteria for people to be allowed to leave their homes officials were ordering them to stay put,” as recently as Friday, April 22nd according to Reuters.

Signs of life returning to normal are evident across China, with even Hong Kong Disneyland reopening after an extended closure. However, the work to bring the world’s second largest economy back to full power is just beginning.

Truckers Hit Hard by Covid Restrictions

While the port of Shanghai officially remained open during the lockdown, it was far from operating at regular volume. The daily cargo volume hovered around 100,000 containers per day, down roughly 30% from the norm of 140,000 containers. Even the containers that made it through the port have piled up as truckers inside China face roadblocks and quarantines.

Some truck drivers were forced to remain for multiple days in the cab of their trucks due to the tight restrictions around Shanghai. After hearing horror stories from fellow truck drivers, some refused to travel. The lack of available truck drivers increased the amount of containers at the port and nearly doubled the cost of domestic transportation involving Shanghai.

Prognosticators say it could take weeks, or even months, for international shipping to return to normal.

shanghai china lockdown coronavirus zero covid government coronavirus cases breakout pandemic endemic shipping supply chainReopening Logistics Present Difficult Hurdle

The Chinese government is doing all they can to ease the stress of the present situation. This includes providing 80,000 Shanghai businesses based in government-owned buildings with six months free rent. Despite this and other incentives, it will take time for the city to ramp up to full capacity. Goods and materials being delivered to Shanghai were nearly stopped completely during the strict lockdown.

“Shanghai is coming back with a vengeance,” predicted Tesla CEO Elon Musk during an earnings call on April 20th. The Tesla plant in Shanghai, known as Gigafactory, restarted production after a 3 week long disruption the day before. Gigafactory workers are taking multiple Covid tests each day while living and working entirely within the factory premises. Tesla was one of the first factories to resume full production during the shutdown.

Tesla remains susceptible, like every other automotive company, to the semiconductor shortage that has plagued the globe for the last two years. Most factories in Shanghai, while no longer lacking workers, do not have enough materials to operate. They are waiting for the trucking apparatus to fully restart and remove the backlog from ports. 

The dominoes of the global supply chain have been knocked down, but with the help of easing restrictions in China they are slowly being set back up.


How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

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WHO: China’s Zero-Covid Policy is Not Realistic

Omicron Variant Causing New Challenges for China’s Zero-Covid Policy

china shanghai beijing zero covidOver the past two years, the world has alternatively applauded and criticized China for its approach to handling the coronavirus pandemic. During the peak of the outbreak, 960 million people were living under some form of lockdown when China first instituted their “zero-COVID” policy. The tough regulations were viewed as a success when restrictions were lifted after five months in May 2020. Individual cases were met with swift action, including shutting down Shanghai Disneyland for two days last November after a single guest tested positive for COVID-19. However, as Shanghai approaches two full months of a strict lockdown in the spring of 2022, it is becoming increasingly clear a zero-COVID policy is unsustainable with the Omicron variant. 

Tedros Adhanom Ghebreysus, the Director-General of the World Health Organization, noted during remarks last Tuesday that the virus is drastically different from the original variant identified in Wuhan. “We know the virus better and we have better tools, including vaccines, so that’s why the handling of the virus should actually be different from what we used to do at the start of the pandemic.” Predicting the animus from China following his comments, Tedros added, “regarding their choice of policies, it is up to every country to make that choice.”

Global Balancing Act to Curb Omicron Transmission

Other members of the WHO have echoed support for Tedros’ comments. WHO Emergencies Director Michael Ryan recommended China reconsider its approach to curbing the virus and any measures to combat the spread must show “due respect to individual and human rights”. The WHO has acknowledged extinguishing COVID-19 worldwide is impossible. At the current moment, the focus is on lowering transmission and lessening the impact on society and the economy. “That’s not always an easy calibration,” continued Ryan. 

President Xi of China has doubled down on the zero-COVID policy. The Chinese government has made it clear any critics will be punished.

WHO Chief Censored in China

China’s displeasure with the comments from the head of the WHO is apparent. Both the criticism of the zero-COVID policy and Tedros himself have been censored on popular Chinese social media sites Weibo and WeChat

This comes as a surprising turn of events. The United States had initially criticized Tedros for his support of China’s extreme response to COVID-19. Then president Donald Trump went as far as to initiate the process of withdrawing the United States from the WHO. This decision was reversed by President Biden upon assuming the office. The United States has historically been the largest funder of the WHO.

tedros director who world health organization president xi jinping china chinese coronavirus international freight forwarding

BEIJING, CHINA – JANUARY 28: Tedros Adhanom, Director General of the World Health Organization, (L) attends a meeting with Chinese President Xi Jinping at the Great Hall of the People, on January 28, 2020 in Beijing, China. (Photo by Naohiko Hatta – Pool/Getty Images)

Economic Fallout from China’s Zero-Covid Policy

Shanghai, China’s most populous city, is slowly making its way out of lockdown. Some shopping malls and markets have reopened. The next step is public transportation resuming operation for limited hours. There are several hundred cases being reported each day. However, this is significantly less than the tens of thousands reported during the peak of the outbreak.

Even if the Chinese government were to lift their domestic zero-COVID policy, the international forecast is not so good. Overseas travel, including freight forwarding, would likely remain severely hampered. The lack of a mass-vaccination program and drop-of-the hat lockdowns following Omicron-related cases has many companies reconsidering their presence in China.


How SiShips Gives You the Advantage

Sheltered International combines expertise with state of the art software bringing you the highest quality domestic and international shipping solutions. With the world constantly changing, SiShips puts the shipper in control. We offer efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

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Shanghai Lockdown Squeezes Supply Chain

China’s Stringent Zero Covid Policy Strikes a Barely Recovered Supply Chain

The supply chain continues to limp along on its Sisyphean struggle back to normal. An outbreak of Covid-19 cases tied to the Omicron variant have caused China to take drastic measures and issue a near total shutdown of Shanghai, one of the world’s most populous cities.

The Shanghai lockdown is notable for several reasons, not the least of which it is the largest lockdown in China since Wuhan, widely believed to be the origin of the Covid-19 pandemic. As of Sunday, March 27th, there were roughly 6,000 cases reported in all of China, with about half of the confirmed cases in Shanghai. This number may seem infinitesimally low compared to other countries, but China has adopted a “Zero Covid” policy for the majority of the pandemic and an outbreak, even of this size, is a major cause for concern for the government.

shanghai ningbo hong kong beijing port lockdown supply chain bottleneck freight forwarding international shipping

Photo courtesy of Pat Whelen.

Effects on Freight Forwarding

Numerous financial services headquartered in the city and the Shanghai Stock Exchange have shifted as many services as possible online. Local restaurants (such as international chains: McDonald’s, Pizza Hut and KFC) have shuttered their doors. Factories and shopping malls are closing for the time being, as well, with any workers who can work remotely being encouraged to do so. Unfortunately, Shanghai’s port, the largest port in the world, does not have that option. Even still, the plan is to maintain operations under the “essential services” label.

While the Shanghai port will still be open, freight forwarders are being encouraged to use alternate ports due to trucking issues and other restrictions in the city. The Shanghai airport is still operating at a normal level, but that could change if more cases are found and the lockdown is extended past April 5th. It is advisable at this moment to prepare for worst case scenarios. 

The capital city of Beijing is experiencing trucking delays due to its own set of restrictions; elsewhere, the Hong Kong border provides a different set of issues. The Ningbo terminal, which has previously experienced pandemic-related disruptions in service, is a recommended alternative until the lockdown in Shanghai is lifted.

Details of the Shanghai Lockdown

China is taking extraordinary steps with the Shanghai lockdown. The current plan is to shutdown the city in two halves; east of the Huangpu River will completely shut down except for essential services for four days, then the side west of the river will do the same. The east side of the city is mostly the business district and the west is more residential. Certain financial institutions called employees to their offices before the lockdown went into effect so they could sleep at the office for the duration of the lockdown. The hope is this split lockdown will isolate any cases of Covid-19 without completely disrupting the local, national and international economy.

shanghai port tesla plant huangpu shutdown lockdown residents coronavirus omicron automotive computer shenzenDuring this time, Shanghai is taking on the extensive task of testing every single person who calls Shanghai home—for those of you doing quick math, that’s over 3 million tests per day for the 25 million people who call the city home.

Continued Impacts on the Automotive Industry

The automotive industry continues to be one of the hardest hit by the coronavirus pandemic. Tesla has announced a pause in production in their Shanghai plant until at least Thursday, March 31st. Incidentally, CEO Elon Musk announced he had tested positive for Covid-19. All of this comes at a time when Tesla stock prices are, against all odds, skyrocketing amongst rumors of a potential stock split.

Despite delays in the supply chain and rises in gas prices, forecasters remain bullish. However, these new lockdowns in China and the war in Ukraine are squeezing the supply chain about as thin as it can possibly go. US auto sales are slumping, with finger pointing at chip shortages, inventory size and other possible culprits. The reality is less affluent buyers are being kept out of the automotive market. Car sales are expected to fall 24% in March and 16% in the first quarter. Until the lockdowns are lifted and bottlenecks clear, inventories will continue to shrink and prices will continue to rise.


How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

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Inflation Rising from All Corners of the Globe

Covid Outbreaks in China, War in Russia

As the two year mark since the first coronavirus lockdowns approaches, life in the United States is close to resembling a pre-pandemic world—at least on the surface. While mask mandates are being lifted and the rate of new cases is the lowest since March 2020, the supply chain is still struggling under the pressure of inflation and gas prices at all-time highs. The Federal Reserve has indicated they intend to raise interest rates to curb inflation, but factors from international partners have massive complications.

The global economy is bracing for a two-front fight between Russia’s assault on the Ukraine and new lockdown measures in China. How much these events will affect cargo movement around the world is dependent on high-stakes diplomacy and the efficacy of medical care.

china shenzhen lockdown coronavirus omicon spike essential employees shipping logistics

Photo courtesy of Lysander Yuen via Unsplash.

Inflation from Chinese Lockdowns

Currently, China is dealing with its largest outbreak of coronavirus cases since the initial explosion in Wuhan. Mainly driven by the Omicron variant, infections have increased from a few dozen per day to over 5,000 on Tuesday, March 15th. These numbers may seem small compared to other countries, but the speed at which rates are rising and China’s strict zero-Covid policy is causing alarm.

In response to the new cases, over 37 million people in China are under lockdown. All non-essential workers are required to stay home in certain cities. This is leading to a complete shuttering of factories that produce semiconductor chips, computers and more. It is unclear how long the lockdowns will last, but it will be one week, at least. SEKO Logistics, a shipping company based in Shenzhen, revealed in a press release they “have not yet been advised of any official restrictions to Yantian Port [in Shenzhen],” but “no cargo will be able to load in Yantian from next week and vessels most likely will omit the port.” 

With demand still high for all types of consumer goods, any delays lead to negative long term effects; as was evident last summer with the shutdown of the Meidong Terminal in Ningbo.

Inflation from Russian Sanctions

For many Americans, the most acute economic pain over the last month has been felt at the gas pump. The sharp rise in fuel prices stems from the powerful sanctions levied at Russia over their incursion into Ukraine. 

russian ukraine opec ocean gas crisis diesel inflation

Photo courtesy of Emmaus Studio via Unsplash.

Although only a small percentage of American oil comes from Russia, the sanctions have had a far-reaching effect in a global market. The average price of crude has jumped, due to Europe looking for fuel sources other than Russia. This comes at a time when oil production was significantly down—barrels of oil traded at a negative price point during the worst of the coronavirus stay at home orders. It will take time for supply and demand to stabilize after several rocky years.

“Everything that you have touches a truck,” said Cherri Harris, the CEO of Swint Logistics Group. With prices of diesel fuel over $5 per gallon, a single truck can spend more than $500 per day solely on fuel. The price increase is eating into profits and that cost is eventually passed onto the consumer. 

Looking Ahead

This is an incredibly complex time for the global economy. Budgets and plans that have been in place for months have to shift at a moment’s notice. Even the Fed is reconsidering its timing to raise interest rates.

In China, the hope is an incredibly stringent lockdown will minimize the economic fallout for a new spike in cases. Optimistic predictions from the Chinese government give the impression they expect the lockdown to be lifted before the end of the month. 

On the other hand, sanctions on Russian oil will likely last until they withdraw from Ukraine. There is only one person who can call Russian troops home and they seem impervious to international pressure, at least for the moment. Meanwhile, oil companies look elsewhere to make up the difference from the lack of Russian oil. Chevron, for example, has made it clear they are willing to work with Venezuela instead of Russia, if the Biden Administration lifts sanctions on the South American nation. Republicans highly critical of Venezuela put Biden in a precarious place politically as he attempts to work down gas prices creating a stalemate for the foreseeable future.


How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

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Post Chinese New Year Shipping Outlook

The Sun Rises in the East

As 2021 drew to a close, America faced a tough road ahead due to a historic rise in inflation and European growth slowed due to rising energy costs. The, as for now temporary, delay of the Nord 2 Pipeline has contributed to the high price of energy, as well. Russia’s incursions into Ukraine have made the outlook in Europe even foggier. As we examine the Chinese shipping outlook, it is clear economies from every continent are more intertwined than ever.

Following the Regional Comprehensive Economic Partnership (RCEP) entering into effect on January 1, 2022, the Asia-Pacific region looks to lead economic growth through the remainder of the year. This year’s Lunar New Year celebrations were slightly milder than usual with many Chinese citizens staying home due to pandemic restrictions. Now that the Lunar New Year festivities are winding down alongside the decrease in Omicron cases, Chinese enterprise is poised to explode. 

shipping lines freight forwarding q1 outlook lunar new year pacific atlantic

Renewed Hope for Sino-American Relations

Despite a diplomatic boycott of the Beijing-hosted Olympics, the economic relationship between China and the United States looks to improve in 2022. A leading reason for this rosy outlook is the power of the RCEP, as the world’s largest free trade agreement. In fact, US companies’ investments in 2021 increased 30.9% year-on-year and look to continue on the same trajectory. The global economy as a whole is projected to rebound this year, creating more investment opportunities for multinational corporations in America, China, and other countries.

Another benefit of the RCEP is creating elasticity in regional supply chains. One of the important provisions in the historic agreement is improving the division of labor among the 15 member states. Moving on from Covid-19, everyone is looking for ways to protect the supply chain and this agreement will be effective for years to come.

Impact of Covid-19

Compared to the early years of the Covid-19 pandemic, countries and corporations appear to be more in control of proper responses to outbreaks. The Omicron variant created a series of difficulties, but the spike combined with the Lunar New Year could have resulted in catastrophic backlogs at Chinese and American ports. While there are still delays and tightened capacity at ports around the world, a combination of ever-increasing access to vaccines and preparedness by private companies has mitigated worst-case scenarios. For example, Maersk is one of several companies to secure extra storage and transportation to ride out the Lunar New Year downtime.

los angeles long beach california port congestion fines cargo transportation global supply chain fines residential containers

Shipping Rates Remain High

2021 was a banner year for shipping companies and 2022 looks to be much the same. Q1 began with high costs as everyone prepped for the Lunar New Year holiday. As we enter Q2, stores needing to restock depleted inventories will keep those rates at the same price or push them even higher. Deutsche Bank is predicting Maersk and Hapag-Lloyd rates will be up 30% or higher compared to 2021—a previous record. 

Even less excitable forecasts have to contend with the potential outbreak of another Covid variant, continued labor negotiations and the possibility of a global military conflict, all of which would escalate shipping costs for every route.

How SiShips Gives You the Advantage

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

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Port Congestion Expected to Continue Into the New Year

High Consumer Demand Prolongs U.S. Port Congestion

Already high consumer demand is growing, causing imports from Asia to continue congesting U.S. ports. Imports are forecast to remain elevated into February and push even higher in the second quarter of 2022.

2022 to Bring an Early Peak Season for Imports

U.S. ports have been struggling with congestion all year, and this is expected to continue into the new year. The annual Lunar New Year lull is typically a period of time that allows any backlogged cargo to be cleared up, but 2022’s “lull” is only expected to last for a matter of weeks in February. LA port chief Gene Seroka also believes 2022 will bring an earlier than usual peak season. This fall, retailers described record-breaking peak season volumes, and are now working to rush ship their products to the U.S. before factories in Asia close on February 1st for Lunar New Year celebrations.

port congestion lunar new year los angeles long beach ports chinese shipping containers delay

Photo courtesy of Tran Huy.

For the past few months, big-box retailers have pushed back their restocks in order to focus on importing holiday merchandise. U.S. imports are expected to increase 4.6% in December, 9% in January, and 7.3% in February. By March and into April, these percentages are expected to drop. Retailers in the second quarter will only have a few months before the rush to restock begins again with back-to-school products.

Trans-Pacific vessel capacity will be tight into 2023, causing retailers to begin shipping their peak season merchandise earlier than usual in the late spring of 2022. Warnings of a second port congestion issue were released last week, but congestion issues will only truly be resolved if imports from Asia slow down considerably. Based on recent consumer demand trends, a slowdown is not likely any time soon.

Above Average Container Dwell Time Contributes to Congestion Issues

port congestion los angeles long beach united states international freight forwarding lunar new year imports

Photo courtesy of John Simmons.

Los Angeles and Long Beach ports have experienced the worst U.S. port congestion. These two ports handle 50% of all U.S. imports from Asia, and the amount of imports these ports receive continues to increase. Large numbers of empty containers left at terminals and long-dwelling import containers are contributing to congestion issues, as well as warehouse congestion. The average dwell time for these containers is above 10 days, which is more than double the normal dwell time of 4 days or less.

Despite the LA port shipping back 43% more empty containers to Asia than this time last year, empty containers remain an issue. Carriers are being asked to return their containers to Asia by sending sweeper ships, whose purpose is to take empties away in bulk.


How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

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Power Crunch Races Through China

Perfect Storm of Circumstances Decimates China’s Energy Grid

Extreme weather, an increased demand for energy and strict limits imposed by the government on coal usage are leading to rolling blackouts throughout Northeast China and the rest of the country.

The timing is inauspicious for a global supply chain already stretched dangerously thin, especially as we enter the peak shipping season and year-end holidays for European and American markets.

china power crunch outage blackout delay shipping global supply chain

Why Is There A Power Crunch?

Over the summer, factories in ten Chinese provinces have cut output or closed temporarily, following government-imposed power cuts to curb carbon emissions. Those provinces affected include Jiangsu, Guangdong and Zheijang, which are home to plants that produce steel, plastics, chemicals and textiles. These provinces are also the location of the busiest ports in the world, such as Ningbo and Guangzhou, which had already suffered backlogs related to Covid-19 within the past few months.

Also, due to the efforts to curb carbon emissions, mines have been instructed to harvest less coal, which as led to a nearly doubling in the price of coal since this time only one year ago. Coal accounts for 60% of China’s total energy output, but even efforts to utilize green energy have been thwarted by nature. Droughts have crippled the potential to offset the high coal prices with hydropower.

china global supply chain ningbo province power crunch outage rolling blackout coal hyrdopower

What Does This Mean for China and the World?

The most immediate issue faced by the power shortage is in the homes of the billions of Chinese citizens. Traffic lights, failure of heating systems and the shutdown of elevators in high-rise buildings have brought many people to seek medical care; in the Liaoning province, 23 workers where sent to the hospital with carbon monoxide poisoning when ventilators unexpectedly and suddenly shut off.

American companies Apple and Tesla have been warned th

at production lines have been and will continue to be negatively affected. Some economists are projecting China’s GDP to decrease by nearly 1.5% in the fourth quarter of this year. Industrial output growth In September decreased 4.5% adding to the short-term global concern of rising ocean freight rates.

How Long Will the Power Crunch Last?

Unfortunately, there is little hope that the energy crunch and intermittent power outages will vanish overnight. Nationwide safety checks in coal mines that have recently seen a concerning uptick in deadly incidents have resulted in massive suspensions of operations across all of China, leading to a further rise in the price of coal. Forecasts are predicting the situation will continue until at least the end of the year, possibly even into the spring of 2022 as a demand for heat during the winter months will continue to stretch the power grid.

Business owners are frustrated with the power crunch, which has been exacerbated by President Xi Jinping’s goal of a carbon neutral China by 2060. China, as it currently stands, is massively dependent on coal power and it will take time to fully transition to a grid supported by hydro, wind and other sustainable forms of energy generation.


How SiShips Gives You The Advantage

Sheltered International is here to help guide you through unprecedented upheavals in the global shipping market. With our unique combination of technology and shipping expertise, Sheltered International is dedicated to transparency and designed to put control in the hands of the shipper. We will always find the most efficient way to transport your product, saving you time and money.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

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How Is A Shipping Container Made?

Learn How Long It Takes To Make a Shipping Container and Why There is a Current Shortage

Just like you don’t think about how a box of frozen waffles found it’s way to your freezer, it’s probably unlikely that you’ve ever seriously considered how involved and intricate the process of making a shipping container can be (even if you work in the shipping industry!) The process shares many similarities with putting together that cardboard box of waffles, at a much larger scale. It takes teams of hundred of specialized assembly line workers (welders, painters, etc.) to build just one box. When considering the scale at which a shipping container factory operates it is no surprise that they, like virtually every industry over the past year, have dealt with numerous delays stemming from the COVID-19 pandemic.

 

 

What Pieces Are Required for a Shipping Container?

Maersk shipping container ships China box production facilities

Maersk is one of the largest shipping container manufacturers in the world.

The shipping industry is a global industry, but like the Spice Road of old, all shipping roads eventually lead to China. Even Maersk, based in Denmark and one of the largest shipping container manufacturers in the world, has their production facilities located in China.

It starts with steel. Big rolls of the metal alloy are unrolled and cut into sheets (approx. 2-3 meters in length). These sheets are sandblasted, primed and run through a corrugation machine. Corrugation increases the strength of all types of material; picture a strong cardboard box compared to a flimsy sheet of paper.

The sheets are also made to use roof panels, floor braces, and wall panels. Now that we have all our formed pieces, it’s time to build some containers.

 

Some Assembly Required

The initial step of construction is to weld wall panels, square tubing for the tops of walls, and to create a floor frame assembly. This floor frame looks much like a very wide, long steel ladder and provides structure and strength for the rest of the build. Corner posts are added and welded to the floor frame. Smaller pieces of the corrugated steel are used to build the door frame, which is then attached to the corner posts and floor frame. This step of the process is nearly identical to the initial framing of a house, except instead of wood and nails, we’re welding steel. Roof panels are then added, and are quite flimsy by themselves until they are attached to the pre-existing framework of the container, as they lack corrugation.

shipping containers construction how to build hardware steel

Logos and other paint decorations are one of the final steps in the building process.

The container now looks more like a finished product than ever. It is put on temporary wheels and run through priming, painting, and touch up. Workers then add varnished wood flooring and attach it to the container with a combination of wood glue and heavy-duty screws.

Any exterior decoration is now added and door hardware is installed. The all-important waterproofing stage begins by outfitting the door with rubber seals and waterproofing the bottom of the box in a specialized tunnel.

There are a series of inspections and tests including a run through the “car wash” to make sure the box is watertight and can handle extreme elements. Thanks to the hard work of dozens of people, we have a Grade-A shipping container!

 

Reasons for Current Shortage of Shipping Containers

box shipping container port blockage back up congestion

There are shipping containers available, they’re just not where they need to be around the world.

Believe it or not, the time it takes to complete all of the steps lined out above is roughly twelve hours (including watching the paint dry). The real question is how quickly does the shipping container become available after placing an order? Normally, lead times for delivery of a shipping container is six weeks, but during the pandemic the shipping industry has seen those lead times stretch out to nearly four months.

Even still, China is expected to produced 5.4 million TEUs (20-foot equivalent units) of steel boxes in 2021, so how can there possibly be a shortage? Simply put, the shipping containers that do exist are in the wrong place. The now infamous blockage in the Suez Canal in addition to shutdowns at Chinese ports due to Covid-19 have pushed already strained shipping lines to the brink. In fact, the “shortage” of shipping containers is a bit of a misnomer; the physical number of shipping containers in existence exceeds the requested capacity. However, the lack of available shipping containers in desired locations will remain, in some form, until ports can work through their congestion.

 


How Can SiShips Give You An Advantage

If you’re looking for a shipping partner to guide you through the confusing waters of international and domestic trade, SiShips is here to help. We combine our personal expertise with state of the art software to work through any and all delays across the globe. SiShips can work with you to find the most cost and time-efficient ways to transport your product wherever it needs to go.

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China’s Ministry of Transport Considers Ban on Rate Increases, Blank Sailings for US-China Trade Lanes

How China’s Intervention May Affect Capacity and Rates for Ocean Freight Long-Term

As ocean cargo rates continue to surge, China’s Ministry of Transport is taking steps to prevent any further increases. Last week, Chinese authorities discussed a possible ban on rate increases, which would apply to the GRI planned for mid-September. To boost capacity, they also suggested prohibiting the blanking of any sailings on the transpacific route, significantly impacting the ability of carriers to manage capacity and maintain a profit. Although nothing has been established as of yet, carriers and shippers alike should consider how this could impact their shipments.

China Ocean Freight Rates and Cargo Capacity

Increasing Rates Through Q2

In spite of COVID-19, ocean freight carriers around the world are seeing a year-over-year increase in profit. In fact, demand has made Q2 2020 the most profitable second quarter for carriers since 2010, with a total earned profit of $2.7 billion.

The China-US West Coast trade route has seen a particularly high demand, seeing rates soar by 146% YOY, as compared to the 21% increase seen on Asia-Europe routes. Despite carriers reinstating the majority of blanked sailings, demand is still outpacing capacity and an additional GRI was scheduled for mid-September. This rate increase would have been blocked by China’s ban. While the state-owned China Ocean Shipping Company (COSCO) and OOCL canceled rate increases – and Maersk was rumored to follow suit with rate cuts for both US west coast and east coast – most carriers have moved forward with a GRI. That said, the rate increases are lower than anticipated, suggesting China has had some influence.

Preventing Capacity Management

Adjusting capacity is crucial for freight companies to maintain revenue during times of flux. Although it’s anticipated that spot rates will unlikely to continue rising, thus making China’s ban on rate increases trivial, preventing carriers from adjusting capacity could have a significant impact. As the market slows, the inability for carriers to adjust could prevent them from stemming losses. “This would have an unprecedented impact on the market and, more worryingly, potentially derail the carriers’ ability to manage capacity in the face of extreme demand volatility,” said Lars Jensen of SeaIntelligence.

With so many factors impacting freight rates, it can be difficult to know if you’re getting the best price. That’s where SiShips comes in. Our software gives you instant access to auto quotes and custom quote options, allowing you to tap into our years of experience. That means less time spent worrying about your freight and more time to grow your margins.

To learn more about our software, contact us today.

 

 

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