Freight transport by sea sometimes becomes more expensive: this will certainly increase prices in Lithuania

Prices went up sometimes

Jūratė Cimanavičienė, director of the Lithuanian branch of the Baltic Freight Forwarding and Supply Chain Management company Balti Logistika, told Delfi that the pandemic that hit the world in March balanced freight forwarding and freight prices. as needed.

He said the surge in shipping was mainly due to growing trade imbalances in Sino-European trade, with China being less affected by the virus, breaking export records, while Europe’s exports to China declined due to to production limited by the pandemic.

“This has created an imbalance in the supply chains: full containers brought to Europe from China must be returned empty,” Cimanavičienė explained, adding that deliberate increases in shipping fees could not have been avoided to cover losses due to the coronavirus. .

“There is speculation that seafarers took advantage of the situation to raise rates and bring rates back to a better position, so how can we say that the situation was used in part for more profit? Perhaps they are trying to make up for what they lost during the pandemic. But it is natural that if you have more cargo and do not have the means to transport it, there is a deficit, and naturally creates an opportunity and preconditions to raise prices, “he said, saying that sometimes it is necessary to wait and two or three weeks, what which also leads to merchandise delays.

The company director estimated that around $ 10,000 is now charged for the normal transport of a 40-foot container by sea from China, which is about five times more than before the pandemic.

“We expect the fall in prices to be more likely towards the spring, but we no longer expect them to go back to earlier than a year ago.”

It is difficult to predict how things will go, but we do not see any forecast that the price of transport will fall very steeply, “he said.

Maxima: the price of transport has multiplied by 5, we look for solutions

Agnė Voverė, director of Maxima LT subsidiary Maxima International Sourcing, which is responsible for purchasing and supplying Maxima Group’s products abroad, said that China’s retail chain mainly transports industrial products, such as tableware and kitchenware. home, toys, textiles and do not hide the fact that there have been significant changes in prices recently.

It is estimated that by the end of 2020, container shipping prices had increased almost 5 times compared to the corresponding period in 2019 and provided an example.

“For example, if a 20-foot ocean container costs from $ 1,200. at $ 1,500, now priced at $ 4,300, and shipping a 40-foot ocean container has cost around $ 2,000. today it costs $ 11,000. and more.

Not only that, there is a shortage of places on the ships, so there is no guarantee that the cargo will be transported, ”he said.

According to him, the increase in shipping was mainly due to the fact that the number of cargo ships declined last spring after the COVID-19 pandemic broke out, and the number of cargo ships remained the same.

“We also see that there is a problem with the shortage of empty shipping containers,” he said.

According to the company, the merchandise is transported jointly not only by sea, but also by plane, train or truck.

“We also transport goods from China by train, because it is faster and the price is almost the same as sea transport.

Meanwhile, goods are transported by truck from all over Europe and are mainly food, groceries, household chemicals, cosmetics, etc. Prices for ground transportation are currently slightly lower, ”he said.

As argued, such changes in shipping prices can have an impact on commodity prices, but this, as emphasized, is highly dependent on the product itself.

“The smaller the merchandise, the less influence they have on the final price,” explained A. Voverė, adding that to this day the fastest and cheapest way to transport each load is sought, so cooperation often does not It is only with the transport companies, but also directly with the cargo shipping lines.

Commodity prices will rise

“Balti Logistika” J. Cimanavičienė considered that if this situation on the market continues, it is likely that the products or goods that are normally transported by sea could become more expensive.

“It would affect many production areas, because China is a global production giant and sea transport is the cheapest and most massive route.”

That is, if the raw materials of goods come at significantly higher prices, then of course the prices of goods will change as well. Our customers tell us there are signs of price increases. Everyone evaluates himself.

We are seeing that traders are now watching the market, delaying orders and expecting prices to fall in the spring. However, as long as Europe is affected by the virus, trade imbalances are likely to persist, “said J. Cimanavičienė.

Swedbank Chief Economist Nerijus Mačiulis also spoke about rising prices for products shipped from China.

“If the transport of goods from China to Lithuania becomes so expensive, traders cannot stop raising prices.

Of course, in rare cases, the suppliers or traders themselves can “eat” the costs, but most of the time, sooner or later, they end up in the price of the final products. And shipping here is just one component in terms of price increases.

The jumps in the prices of food raw materials, wheat, soybeans and other food grains in recent months. Copper and iron ore became expensive at the highest level in the last three years.

There have been disruptions in the supply chain, insufficient transport capacity and this is leading to more expensive transport. For a while, it seemed that everything here was only due to the period leading up to Christmas, when there is a greater demand for freight transport, but in January, transport did not decrease at all, ”said the economist.

According to him, if the products have not become more expensive yet, this year we will definitely see their price increase.

“It just came to our attention then. Both food products and various everyday and durable goods. Now it is very difficult to name exactly what will be expensive and when, but looking at the raw components, we will see that trend,” predicted N. Mačiulis and He said that oil is currently about a fifth more expensive than last year, which will also be reflected in prices.

“In the short term, there can be a lot of price spikes of this kind, especially after last year when investments were frozen.

Of course, the expectation is that these will be short-term jumps and we will see an economy in recovery, people vaccinated, so it is natural that investments will recover very quickly, “said the economist.