The surge in international shipping prices may primarily be attributed to two key factors.
Firstly, as geopolitical conditions drive up shipping costs, companies in the industry will seek to increase prices in order to alleviate cost pressures.
The efficiency of the Red Sea-Mediterranean Sea route has decreased by 50%, and the diversion of container ships around the Cape of Good Hope has resulted in a slowdown in shipping capacity turnover, which is a significant factor contributing to the rise in freight rates.
The shortage of capacity caused by this circumnavigation has led to an increase in freight rates, and it is likely that this capacity gap will support higher freight rates for some time.
Secondly, there is an increased demand for replenishing inventory, which gives shipping companies confidence to raise prices.
The volatile global situation has prompted buyers to prefer maintaining higher inventory levels as a response to potential risks and challenges.
This marks a shift from the destocking trend observed over the past two years towards a short-term surge in trade demand.
Notably, there is intense price competition on South American routes due partly to inventory reduction after the pandemic; thus, there is a need for replenishment within the Latin American market.
LEEXIN pack team will continue to pay attention.
