The South China Morning Post (SCMP) has been Asia’s primary newspaper and portal for more than a century, which is why being called on by SCMP journalists for our expertise in these challenging times is such an accolade.

The cost of shipping by sea from Shanghai to the west coast of the US more than doubled between May to August, to the highest rate since 2009.

Many shipping firms cut back their operations earlier this year due to the coronavirus, but are now struggling to meet demand as exporters worry about the escalating trade conflict.

Cargo volumes for the US picked up rapidly during the summer months, mainly because traders are shipping in advance due to concerns about Sino-US trade friction.

“Demand in the US has rebounded strongly, more than we expected and I think for a lot of carriers, it’s hard for them to adjust.” Stefan Holmqvist, NGL Asia managing director told The South China Morning Post this week

The third quarter is typically a peak season for Chinese exports, as many importers start stocking up on goods for the festive holidays at the end of the year, including Christmas.

Exports to the US by sea started growing in June from a year earlier and in July, exports to the US rose by 7.8% from a year earlier.

China’s week-long Lunar New Year holiday – when most businesses in China shut down – starts on February 12 next year.

Interviewed by SCMP reporter, Sidney Leng, Stefan Holmqvist, NGL Asia managing director estimates that around 5% of sea cargoes from China to US currently consist of personal protection equipment (PPE).

Most of the PPE products that were delivered by air earlier this year as demand soared amid the various outbreaks across the globe are now being shipped by sea, which has also increased demand for shipping capacity.

“The demand in the US has rebounded strongly, more than we expected. And I think for a lot of carriers, it’s hard for them to adjust as fast as the market is adjusting,” Stefan said.

“Uncertainty over the tariff exclusion extension also drove US importers to restock even more. Also, we have now come to the last month before the long holiday week in October in China, when factories are closed. All of these things are reasons why we have record-high rates at the moment,” added Stefan, referring to the week-long National Day public holiday starting from October 1.

Ships docked at Shanghai ports heading to the US and Europe are almost fully loaded at the moment, with delays possible due to overbooking.

When the pandemic started spreading globally earlier this year, many shipping
firms sharply cut back their operations, with the idle capacity of container ships worldwide rising to more than 11% in May and even if shipping companies now increase their capacities, they will not be able to completely ease the pressure from a shortage of supply in the short-term.

Click HERE to read the SCMP article in full “China exporters under pressure from soaring US shipping costs ahead of Christmas as demand outweighs supply”