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The shipping index soared by 381%, exacerbating U.S. inflation

The shipping index soared by 381%, exacerbating U.S. inflation

esther souhangwang 2021-07-15 16:47:52

Shipping is the world's most important method of freight, and it bears nearly 90% of the world's trade volume. However, the world is currently facing the "lack of containers", which has caused the cost of shipping to skyrocket, which will inevitably shift to prices, and will undoubtedly "add fire" to the current global inflation.
According to reports, Mai Boliang, the "helm" of China International Marine Containers Group (CIMC), the world's largest container manufacturer, gave two reasons for the global "lack of containers". The first is that the port congestion has not been resolved in time. The top 20 terminals in the world are in "traffic jams". Many freighters line up for loading and unloading, and boxes cannot be shipped back in time; the second is related to the epidemic, because some countries have suffered repeated epidemics, resulting in suspension of work and production Status, which exacerbates the difficulty of the circulation of goods.

Of course, the so-called "lack of containers and less containers" does not mean that there are too few containers and not enough, but because a large number of containers are piled up at the port and cannot go out, there are fewer boxes for shipping goods out of the sea, resulting in a shortage of shipping capacity. You know, under normal circumstances, a cargo ship of 18,000 TEUs only needs 10 hours to complete operations. But now it may take 2-3 days, which has caused the boxes to be not processed in time, and the boxes have to be loaded and unloaded continuously.
As early as September last year, the phenomenon of "lack of containers and less cabinets" has begun to appear. So far, many ports around the world have experienced serious congestion problems. For example, there are as many as tens of thousands of containers stranded in California, the United States; nearly 6,000 containers are backlogged in the Port of Auckland, New Zealand; and the containers piled up in the Port of Felixstowe in the United Kingdom have spread to nearby suburbs...
At the same time, the recovery of global trade and the surge in demand for goods from various countries have increased the congestion of the ports. It is not difficult to understand the increase in freight rates due to the prolonged transportation time. At present, the freight rates of global shipping are increasing. Data shows that the global container freight index (WCI) and the Baltic Dry Bulk Freight (BDI) have increased by 381% and 728% respectively since May last year.
The soaring cost of shipping will naturally shift to prices. Take grain prices as an example. In the past year, grain prices such as corn and soybeans have risen by more than 70%, which is attributed to the increase in freight costs. Take soybeans as an example. As of July 9th, the freight for importing soybeans from the United States was US$81/ton, an increase of 108% compared to the same period last year.

As the world's largest importer of goods, the US's import price index increase in May this year (11.3%) set a new high since 2011. What needs to know is that the United States is currently experiencing severe inflation. The country’s latest CPI (Consumer Price Index) data rose 5.4% in June, a record high since 2008.
In addition, the United States is very dependent on imported goods. Most of these goods are transported by sea. Therefore, the increase in sea freight has a relatively large impact on US inflation. In order to reduce consumer costs, on July 8, the "helm" of the United States ordered the country's transportation regulatory agency to crack down on unfair charges and anti-competitive behaviors of shipping and railways.

However, even if the current global shipping is facing the situation of "a box is hard to find", China's foreign trade has still achieved "good results." Judging from the published data, my country’s total imports and exports in the first half of the year have exceeded 8 trillion yuan (18.07 trillion yuan), the largest scale in history, with a year-on-year increase of 27.1%. Among them, the bilateral trade volume between China and the United States reached 2.21 trillion yuan, an increase of 34.6%.