By Vincent Wen    Photo：CANVA

Since May, high shipping costs have been a nightmare, especially for exporters from Asia to the Americas. For Southeast Asian factories exporting primarily furniture, a container worth only $10,000 faces shipping costs nearly equal to its value, severely impacting buyers. Fortunately, this dire situation is finally ending.

Shipping Companies' Intentions

During the COVID-19 pandemic in 2021, the surge in global demand and insufficient cargo space caused shipping rates to skyrocket. Rates from Asia to LAX reached as high as $20,000 per container. Exporters and importers were forced to pay these exorbitant fees, benefiting shipping companies immensely. By mid-2022, with the pandemic easing and inventory stockpiled from panic shipments, rates began normalizing.

Shipping companies were eager for another boom. In May of this year, factors such as the Panama Canal drought, Red Sea crisis, and container shortages led them to reduce capacity, attempting to boost prices and profits.

Insufficient Market Demand

However, after two months of adjustments, shipping companies didn't achieve the expected profits due to a sluggish market. Our company visited the US West Coast in July and observed that local warehouses near ports were still well-stocked with low demand. Unlike the pandemic, there isn't panic shipping; instead, it's a period of inventory reduction. While large enterprises needing imports and exports still generate revenue for shipping companies, many small and medium-sized businesses opted to pause shipments and wait for lower rates.

Traditionally, the export peak season is from July to September due to Christmas and New Year. This year, with low market demand, shipping costs are expected to continue dropping in August and possibly into September.

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