Container prices, which have significantly increased globally over the past year, are expected to continue to spike this year, according to U.S. President Joe Biden.
“One of the big reasons why prices are going up is the cost of shipping things across the Pacific, in particular,” Biden said during a call with retailers, per Freightwaves.
There are only nine major ocean line shipping companies who ship from Asia to the U.S., Biden said, and those companies have raised their prices by as much as 1,000 percent.
In May, the average container prices globally have soared at an average of 5.4 percent for the 20-foot DC and by 15 percent for 40 foot HC, according to tech firm Container xChange. And experts only expect the problem to worsen.
“We expect a surge of containers onto the transpacific, leading to higher utilization of vessels on this route,” Container xChange Cofounder and CEO Christian Roeloffs said in a press release. "We could see a surge in spot rates, especially with the upcoming peak season.”
While the Shanghai, China, port has reopened and is expected to normalize by July, Beijing and its biggest harbor, Tianjin, are still in lockdown and the Shanghai shutdown still has impacts, Roeloffs noted.
“All cities are so interlinked, that it influences the whole of China,” he said.
In addition, there is still “major congestion” at ports in Los Angeles, California, U.S.A. and Houston, Texas, U.S.A, Roeloffs said.
The National Retail Federation (NRF) and Hackett Associates expect near-record volume at the U.S.’s major retail container ports in June, according to the organizations’ monthly Global Port Tracker report.
“We’re in for a busy summer at the ports,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “Back-to-school supplies are already arriving, and holiday merchandise will be right behind them."
The big “wild card” is what will happen with U.S. West Coast labor negotiations with the current contract set to expire on 1 July, Gold said.
“We continue to encourage the parties to remain at the table until a deal is done, but some of the surge we’ve seen may be a safeguard against any problems that might arise,” Gold said.
Biden has urged Congress to pass the Ocean Shipping Reform Act to address some of the issues causing shipping delays and higher prices.
“I expect it to pass. And I’m looking forward to signing it,” Biden said, according to Freightwaves.
And Port Houston is undergoing a USD 1.1 billion expansion of the Houston Ship Channel, which is expected to accommodate an additional 1,400 vessels annually, per Freightwaves.
Photo courtesy of Sheila Fitzgerald/Shutterstock
