The sharp increase in international shipping prices may primarily be attributed to the following two factors.
Firstly, as geopolitical conditions drive up shipping costs, shipping companies will seek to raise prices in order to alleviate cost pressures.
The efficiency of the Red Sea-Mediterranean Sea route has decreased by half, and the turnover of shipping capacity resulting from bypassing the Cape of Good Hope has slowed down significantly, which is a significant factor contributing to the rise in freight rates.
The shortage of capacity caused by container ships circumnavigating has led to an increase in freight rates, and this capacity gap is likely to support higher freight rates for some time.
Secondly, there is an increased demand for replenishing inventory, giving 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.
Particularly fierce price increases are seen on South American routes due partly to inventory reduction after the pandemic; thus, there is a need for replenishment in the Latin American market.
ZGREAT team will continue to pay attention to the shipping situation and update you