The downward trend in ocean freight prices continues, which is one of the factors that cross-border sellers are so looking forward to for the peak season in the second half of the year: maximizing profit levels while reducing costs.
Compared with last year, both new and old sellers, in terms of channels, the proportion of products shipped by sea has increased significantly this year, and the proportion of products shipped by air has decreased. An Amazon seller said that this year's new products can still be launched, but the advertising cost is too high. "In the past, new products were launched, and the first batch of new products must be delivered by express delivery. Although it is expensive, the timeliness can be guaranteed. This year, 90% of them are shipped by sea, and we need to find ways to optimize costs in all aspects."
01Over 60% of sellers increase the proportion of seaborne products
According to the research data of Hugo’s cross-border seller group, 66% of sellers said that compared with last year, the proportion of products shipped by sea has increased this year.
Continued declines in ocean freight rates are an important factor in why sellers have increased the proportion of products shipped by sea. An Amazon seller bluntly stated that the freight forwarding quotations for long-term cooperation have been getting lower and lower recently. "In the past, it was necessary to book the space one month in advance, but recently, it only needs to be booked one week in advance. Moreover, recently, there are more space, and there are more cases of logistics companies lowering prices."
According to the FBX Global Container Freight Index launched by the Baltic Shipping Exchange and Freighto, as of August 16, 2022, the freight rate index from Asia to the Americas and West was 5,898, down more than 70% from the high point in 2021; The price index was 10,121, also down about 30% from this year's high.
Among them, since May 20, 2022, the shipping price from China/East Asia to the West Coast of North America after a rebound has dropped from $13,698/FEU to $6,632/FEU, a drop of more than 50%.
Judging from the quotation of a freight forwarder, the current price of Mason has dropped to about 12kg/yuan. However, according to the freight forwarder, this price is not the lowest level. In the case of reduced orders and excess capacity, the shipping company will also take the initiative to reduce the price. There is still room for the US shipping price to continue to decrease. down to $3,000.
Wanhai Shipping recently stated that from the 12th to the 31st of this month, the special freight rate for the US West Line is 5,200 US dollars per FEU. This special freight rate is only for goods exported from Shenzhen. Other ports have different charges according to market conditions. The freight rate for exports from Taiwan to Los Angeles is between US$6,300-6,500, and about US$8,000 to Seattle and Oakland.
According to the latest Shanghai Export Container Freight Index (SCFI) on August 5, the current freight rate per FEU on the US West Line is US$6,499, while the quotation of Wanhai Shipping has fallen below US$6,000.
Overall, the main reason for the loosening of sea freight prices is the change in supply and demand. On the one hand, cross-border sellers are still in the wait-and-see stage as to whether the shipping price will continue to decrease in the second half of the year, and the overall willingness to ship is low; on the other hand, the container market is "oversupplied". The capacity deployed on European and American routes has increased significantly, but due to the new crown epidemic, inflation and other reasons, there are far more spaces available for booking than cargo.
02 The peak procurement season for "Golden Nine Silver Ten" has arrived
Labor Day in September, Halloween in October, Thanksgiving in November, Christmas at the end of the year... With the arrival of many foreign holidays, the "Golden Nine Silver Ten" foreign trade procurement peak season is coming, and foreign trade enterprises will also appear a wave order peak. The fall in shipping prices has brought certain benefits to the entire foreign trade export industry.
A person in charge of a foreign trade company that exports small household appliances such as fans told Hugo Cross-border that continuous high temperatures have also occurred overseas this year, and various cooling equipment such as small fans are particularly popular. Considering the cost of shipping, don't let it go. Now that shipping costs have dropped, customers have begun urging him to ship.
"We will try our best to take care of the needs of old customers, especially those with a large volume. Some old customers have been lost due to the epidemic in the past few months, and now we will give priority to guaranteeing the orders of old customers." said the person in charge of the above-mentioned factory.
However, due to repeated epidemics, hot weather, and insufficient factory production capacity, there are major challenges in recruiting workers. In order to catch up with orders, labor costs may be relatively large.
A senior seller in Shenzhen said that a friend who recently opened a factory works overtime until two or three o'clock every day, and works overtime with his colleagues in the factory. The factory owner told him that many competitors have fallen this year, and he has to persevere. Because recently, both factories and sellers are making Christmas season products, and business may slowly improve. "I hope he can make it through this year. After all, the price he gave me was the cheapest."
In fact, many foreign trade people are still optimistic about the peak season in the second half of this year. It was found that CMA CGM (China) Co., Ltd. has been recruiting short-term export shipping customer service for 6 months to cope with the upcoming export peak season.
Taking herbicides as an example, the southern hemisphere has ushered in the peak purchasing season. Recently, the Executive Management Committee of the Foreign Trade Chamber of Commerce under the Brazilian Ministry of Economy approved the reduction of import tax rates on five industrial inputs, including glyphosate and glyphosate isopropylamine salts. According to the decision, the import tax rate on glyphosate in Brazil will be reduced from 9.6% to 3.8%. The tariff reduction measures will take effect on August 5 and will be valid for one year.
It is understood that most of the domestic glyphosate products are currently used for export, mainly in the United States, Brazil, Argentina and other North and South American countries with large GM crops planting area; a small number of products are used for domestic agricultural production. By the end of 2021, the production capacity of glyphosate enterprises in my country accounted for more than 60% of the global glyphosate.
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