Sea freight has been an interesting topic for all the industries worldwide, especially for the tire industry. This is the longest time in history that the freight has been skyrocketing and currently, the freight seemed stable on the shipments from China in February but is expected to increase again. The freight has been 4 or 5 times now and the shipping lines are minting record-breaking money.
Reasons for the increase
There are two reasons for the increase one is Russia invading Ukraine and the other is oil prices skyrocketing. The shipping routes have been disturbed and it is having an impact on the global supply chain. The fuel cost has been increased per barrel as the fuel is increasing shipping costs are automatically going to increase as all the vessels consume oil.
Also, China entering lockdown in several provinces will again have an impact on the global supply chain and the production of goods will be affected. Ports in China are operational currently but a lot of carriers have been seen waiting and are expected delays in the shipments. Many shipping companies have suspended their new bookings to Russia and the volumes of goods are piling up on the ports and this is reflected in delays and increase in the rates. War risk surcharges have been included around $40-$50 TEU on the shipments crossing on the routes of the war. The alternative is Air transport but it is very expensive and it cannot be used for bulk so the best option is the usage of the ocean. Also, tire prices are also expected to increase as the tire is mostly made of rubber and synthetic rubber is manufactured with composition with Crude oil and with oil prices increasing it will have a direct impact on the prices.
