Sea freight rates in China have returned to a reasonable level after reaching record highs last year and early this year amid global inflation, the epidemic and geopolitical conflicts, data from the China Federation of Logistics and Purchasing (CFLP) showed. Domestic traders said the drop in rates, which have been a major contributor to high goods costs, can be a potential driver for sluggish overseas demand and a way to gain an edge in the world market. The CFLP figures showed that while logistics costs have been relatively high so far this year, the rate of increase began to slow in the third quarter. The average reading for the export container freight index in August was 3,033.60 points, down 6.4% from the average of the previous month. Supply and demand in the road transportation market were basically stable, with the road logistics freight index at 103 points, down 0.16% from the previous month. He Liming, CFLP President, told reporters that the declines were reasonable in light of record high rates caused by insufficient capacity in the previous period. The drops “will improve the competitiveness of our enterprises, especially export enterprises,” He said.
Just before the National Day holidays, the cost of a standard container from China to the U.S. West Coast fell below USD2,000, a new low since the start of the epidemic. It was above USD20,000 last year. The Drury World Container Index declined for the 32nd consecutive week, with a 40-foot container costing USD3,688.75, an 8% fall, and 64% below the peak of USD10,377 of September 2021. Zhong Zhechao, Founder of One Shipping, an international logistics service consulting firm, told the Global Times that lower freight rates are definitely good news for exporters, because cargo rates represent a fairly large part of total costs – sometimes even more than the value of the goods. The impact of lower cargo rates has already been partially reflected in rising container throughput in the Yangtze River Delta, China's production and trade hub. From January to August, Ningbo Zhoushan port, the world leader in throughput, handled 23.7 million standard containers, up 10.9% year-on-year.
A manager with a Shenzhen-based export company said that shipping costs could account for 60% of total production costs at the peak, but now it was only about 10%. “Export orders have jumped by 30% since the rate fall,” the manager said. Industry insiders said that it will still take some time to see how lower cargo rates will affect China's exports, the Global Times reports.
