Rising consumption in China and US contributes to sharp increase in container freight rates

Shanghai Port (Source: Imgur)

According to a report released by Korea Ocean Business Corporation (KOBC), consumption increased before and after China's Labor Day holiday, a railway strike in Canada and concerns related to management conflicts. Labor regulations at U.S. ports are contributing to a spike in shipping rates.

The report said that besides the oft-cited Red Sea crisis and the shortage of ships and containers, other factors were also responsible for the spike in freight rates.

“During the Labour Day holiday in China from 1-5 May, many places were crowded and consumption surged,” KOBC noted.

The consumer push comes from the Chinese government, which has declared 2024 a “year of promoting consumption” to revive demand. As part of the effort, the government encourages people to renovate their homes and replace old furniture.

Consumers in China also receive subsidies of up to 10,000 CNY (1,380 USD) to replace their conventional vehicles with electric or hybrid vehicles.

During the Labor Day holiday, used goods swaps were held, helping sales of vehicles, appliances and furniture increase 5% to 8% over last year. E-commerce sales have a rapid growth rate, up nearly 16% over the same period last year. Throughput at Shanghai port increased 4% year-on-year in April, to 4.18 million TEU.

Fears that Canadian railway workers might strike also pushed up trans-Pacific rates. Canadian National Railway and Canadian Pacific Kansas City still hope to cooperate with the Teamsters Canada Rail Conference to avert the expected strike ​originally on May 22.

Meanwhile, US consumer demand is increasing and contributing to an increase in US container imports.

According to the National Retail Federation (NRF) of the US, in March, import volume at major US container ports was 1.93 million TEU, up nearly 19% compared to the same month last year.

"It's expected that US demand fundamentals will continue to improve compared to the previous year, exceeding 2 million TEU by the third quarter," KOBC said.

Read more:

• Singapore port becomes new bottleneck in global supply chain
• Early peak season along with bad weather and port congestion cause container freight rates to spike unexpectedly
• International shipping and logistics market update - Week 21/2024

Source: Phaata.com (According to ContainerNews) 

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