Cost of shipping container from China to US hits record high in September

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To combat rising shipping costs, companies have resorted to raising prices and renting container ships.

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The cost of transporting shipping containers between China and the United States reached a record high in September.

According to Fritos Index, the average cost of shipping a standard rectangular metal container from China to the West Coast reached $20,586, nearly double its cost in July, up from more than double its cost in January.

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Rising shipping costs in combination with unprecedented supply chain challenges and high demand have forced some companies to take matters into their own hands to ensure that they have the products they need in a timely fashion.

anchor the protection The last Change Change %
Cost Costco Wholesale Corporation 448.33 -1.02 -0.23%
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Last week, Costco said it would limit purchases on bath tissues, roll towels, Kirkland Signature water and high-demand cleaning products related to a sharp rise in coronavirus cases. Chief Financial Officer Richard Galanti estimated on the company’s fourth-quarter earnings call that overall price inflation for its products is now in the 3.5% to 4.5% range, up from last quarter’s estimate of 2.5% to 3.5%, And that both Costco and its suppliers are paying two to six times as much for containers and shipping.

In addition to placing its orders first, Galanti said Costco will lease three of its container ships to transport goods between Asia and North America. Each ship will carry around 800 to 1,000 containers at a time, and the company plans to make about 10 deliveries during 2022.

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Meanwhile, other companies are passing the cost burden on to the consumer in the form of price increases.

anchor the protection The last Change Change %
DLTR Dollar Tree, Inc. 97.98 +2.26 +2.36%

Dollar Tree said Wednesday that it would offset rising costs by selling products for more than $1 at all of its Dollar Tree Plus stores. It will also test additional price points at over 100 select Legacy Store locations.

The company now projects that its regular ocean carriers will meet only 60% to 65% of their commitments, down from previous guidance of about 85%. It cited a more than 20% increase in spot market rates for sea freight from China since its first-quarter earnings report in May.

As companies work to reduce costs and keep up with demand ahead of the holiday season, some experts are warning consumers to buy “hard-to-get” items as soon as possible.

“These delays are significant,” FreightWaves founder and CEO Craig Fuller told Granthshala Business. maria bartiromo on Friday. “I would recommend everyone to go ahead and buy those hard-to-obtain items now waiting until the holidays.”

Fuller expects toys, clothing and electronics to be the hardest-hit items to come by this year and that the supply chain may not return to normal until 2023.

In the last year, inflation rose to 4.3 per cent, slightly higher than the previous month and the highest in more than three decades. However, Federal Reserve Chairman Jerome Powell on Thursday expressed hope that supply chain problems could begin to improve next year, potentially reducing inflation within the first half of 2022.

Despite supply chain constraints, consumer spending rose 0.8% in August, up from 0.1% in July and more than the 0.6% growth expected by economists surveyed by Refinitiv.


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