Steven Wang:

Recently, the sea freight rates on many routes have risen to $7,000 and continue to increase. Many shipping companies have started temporarily adding routes to the U.S. to meet market demand. Compared to the situation during the pandemic, when peak sea freight rates on U.S. routes soared to $20,000-$30,000 per container, and even fast ships rose to $40,000-$50,000 per container, the current increases are similarly remarkable. In the fourth quarter of 2023, sea freight rates were about $2,000; now they have risen to around $7,000, a three- to fourfold increase, which is astounding.

In comparison, air freight rates have not risen as dramatically as sea freight rates. Before the pandemic, air freight rates in Europe and America were mostly around ¥20/kg; now they are about ¥40/kg, a one- to twofold increase, which is less than the three- to fourfold increase in sea freight rates.

The continuous rise in sea freight rates has created panic throughout the supply chain. As the fourth quarter is the peak consumption season in European and American countries, many merchants choose to stock up via sea freight in July, August, and September. With the third quarter stocking season approaching, it is almost impossible for sea freight rates to decline. Therefore, we expect that in the third quarter of this year, sea freight rates might approach or even exceed $10,000, which will be a shocking figure.

At the same time, the industry is experiencing panic-induced advance stocking, with many companies rushing to ship their third and fourth-quarter inventories overseas. This could easily lead to the bullwhip effect in the supply chain. When everyone believes that sea freight rates will continue to rise, the entire supply chain engages in panic-induced advance stocking by six months or even earlier, leading to a risk: a year later, the industry might face high overseas inventories and enter a long inventory clearance cycle of about two years.

This year, sea freight rates are likely to remain high throughout the year. Due to the large amount of overseas stocking, demand for overseas stocking might experience a sharp decline next year. Without sufficient shipping demand, sea freight rates may also plummet. Just like the stock market, the faster the rise, the faster the potential fall. Therefore, it is highly likely that sea freight will experience a rollercoaster ride next year.

Overall, compared to air freight, the high sea freight rates might be a short-term market phenomenon lasting 3 to 6 months. Currently, global sea freight capacity remains in surplus, and coupled with the inventory buildup caused by this round of price increases, sea freight rates might remain high for the next six months to a year. However, the high air freight rates might persist for the next 3 to 5 years, or even 5 to 10 years, indicating a longer-term, more certain trend. Thus, sea freight presents short-term opportunities, while air freight offers a more significant dividend period over the next 5 to 10 years.

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Public account:Cross-Border E-Commerce Logistics Baixiaosheng