China’s cargo tariff drops to ‘reasonable level,’ reports data from China Federation of Logistics and Purchasing

  • September 18, 2022
  • News

The data from the China Federation of Logistics and Purchasing (CFPL) shows that China Sea freight rates have reverted to a reasonable level from record highs the previous year and earlier this year amidst global inflation, pandemic, and other political conflicts. The data shows that while logistics costs have been comparatively high up to this year, the rate of increase began to slow in the third quarter.

The domestic traders said that the drop in rates had been a major contributor to the high cost of goods, a potential thrust for slow overseas demand and gaining an edge in the world market. As per the data, the average number for the export container freight index in August was 3033.60 points, down to 6.4% from the previous month. Mr. He Liming, CFLP president, said to reporters that the down surge was reasonable in light of record high rates caused by insufficient capacity in the same period last year.
The Index released by Drury World Container on Thursday showed that this week was the 32nd consecutive week of the down surge, with a 40-foot container costing $3,688.75, an 8 percent fall, and 64 percent below the peak of $10,377 reached in September 2021.

Zhong Zhechao, of One Shipping, an international logistics service consulting firm, said that lower freight rates are absolutely good news for exporters, as cargo rates signify a fairly large part of total costs – even more at times than the value of the goods.

The impact of lesser cargo charges has previously been partly reflected in increasing container throughput in the Yangtze River Delta, China’s production and trade hub. Besides Shanghai port, which was somewhat affected by the pandemic, other ports in the Yangtze River Delta saw double-digit progress from January to August. Among them, Ningbo Zhoushan port, the world leader in throughput, handled 23.7 million standard containers, up 10.9 percent year-on-year, as per the data sent to the Global Times on Friday.

A staff with a Shenzhen-based export company told the media that shipping charges could account for about 60% of total production costs at the peak, but now it’s only about 10%, which is very good news for the company’s export business. Also, the export orders have jumped by 30% since the rate fell.

Industry experts said that it will take time to see how lower cargo tariffs affect China’s exports.
Low cargo rates also reflect weak demand, Roy Yang, general manager of Zhejiang Yongda International Forwarding Agency, told the Global Times on Friday.
Lower cargo tariffs have also put producers and traders who signed long-term contracts with shipping companies at a disadvantage, the Global Times remarked. He also added that rates will keep reducing for the rest of the year, as capacity expands with new ships being delivered.