Shipping costs between China and Europe skyrocket, technology prices destined to rise

Source: HW Upgrade added 20th Jan 2021

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Hi-tech producers must facing a surge in shipping costs fueled by the shortage of containers and the recovery of consumer demand. The solution? Passing the costs on to final consumers.

by Manolo De Agostini published , at 10: 01 in the Market channel

In jargon it says that “ Trouble never comes alone “and in recent months we have seen it several times, even in the technological field. There is not only the problem of a production that does not keep up with the demand to raise prices of the most desired hi-tech products, such as new generation video cards, but in recent weeks also the cost of shipments between China and Europe has jumped to record levels . The Financial Times reports this in an interesting article.

When Asus (closely followed by other companies in the sector) announced a rise in prices in the United States due to trade tariffs, it cited operational costs and logistics are also among the elements of its decision and unfortunately it seems that the Old Continent will not be immune. Again to use a popular phrase, “all the world is country”.

The Financial Times illustrates how the shipping cost of products from China to Europe has “more than quadrupled in the last eight weeks” , reaching record values ​​in the wake of “a Shortage of empty containers “resulting from the pandemic has disrupted global trade. “The cost of shipping a 01 meter container from Asia to Northern Europe has increased give approximately 2000 November dollars to over 9000 dollars , according to shippers and importers “, reports the business newspaper, delving into the reasons that led to this situation.

Thousands of empty containers got stuck in Europe and the United States in the first half of 2020 when shipping companies canceled hundreds of trips due to coronavirus lockdowns that caused a sudden slowdown in global trade. When Western demand for Asian-made goods rebounded in the second half of the year, the competition among shippers for available containers has f act to increase transport costs “.

We have therefore gone from a collapse in shipments to a very high demand , and this has sent the shipping chain into crisis, with strong congestion at commercial ports and companies transport which to compensate for the waiting times have increased the price lists. Another problem is that “since November the cost of shipping to Europe has been aggravated by the diversion of containers to the transpacific routes . Conversely, the cost of shipping from China to the US has stabilized since October, when the Chinese government asked shipping companies to limit their rates. “

The cost of shipping is not a small problem, in fact it impacts on the profit margins of the manufacturing companies. The UK Association of Manufacturers of Domestic Appliances said there have been cases of increased shipping costs among its members up to 300% compared to the beginning 2020, with episodes in which the increase in cost exceeded the profit. What to react? Wait for better times, but causing a shortage of products on the market or pass the costs on to end users.

The situation may not improve for much of 2021, even if hopefully in the Chinese New Year in February: the slowdown in production could make it possible to clear back orders and to calm prices, at least temporarily. However, it is a faint hope. Unfortunately, even from the point of view of air shipments there is no good news: in recent weeks Dell and HP had raised the alarm, seeing in the start of the distribution of vaccines for COVID – 19 a bugbear for the delivery of notebooks, forced to compete with vaccines for space, already narrow, on cargo planes.