China-US freight rates plunge, but China manufacturing woes create new headaches for shippers

Shippers might finally be catching a break, as China-US spot freight rates plunge in the first week of October.

With Chinese manufacturers throttling production due to the power crisis and the off-season coming into view, competition for freight capacity in terms of containers and vessel space has fallen off, moving prices down by up to 51.4% on some routes. 

Data provided by digital freight forwarding company Shifl shows that the spot rate for shipping a 40-foot container from China to Los Angeles dropped by $9,000, or 51.4% between September and October of this year, from a high of $17,500 to $8,500.

For China-US East Coast shipping, rates dropped by 28.2% in one month, down to $14,000 per container in October from $19,500 in September. 

However, this temporary reprieve could soon be overshadowed by a growing backlog of unfulfilled orders. Chinese energy rationing policies and the impact of COVID-19 shutdowns are throttling factory output meaning that US and EU manufacturing orders are not being filled on time. While US and EU businesses scramble to diversify their supply chains, inventory shortages and price increases will become more pronounced.