With record high shipping rates and insufficient transport capacity set to “plague” companies in China into next year, Beijing is set to study targeted measures to help exporters. Surging prices and gridlocks are wreaking havoc on global supply chains, the cost of sending a container from Asia to the east coast of the United States this week rising by 442 per cent from a year earlier to US$20,057 per 40-foot equivalent unit, according to US-based freight-tracking firm Freightos on Wednesday. “The tight transport capacity and high freight rates is a global phenomenon,” Ministry of Commerce spokesman Gao Feng said on Thursday. Gao confirmed various government ministries and departments have combined to “actively take measures to increase container supply, enhance shipping capacity and strengthen international cooperation”. No matter Chinese companies or the government, they all had better have some good mental preparation for this prospect Liu Chunting “Local authorities have also stepped up shipping supporting services for small and medium-sized enterprises to help them reduce costs and losses,” he added. “We will continue to work with relevant departments and localities to further study targeted measures, stabilise the international logistics and strengthen cooperation with various trading partners to cope with the challenges together.” Liu Chunting, manager of the operations department at China Merchants Energy Shipping, on Wednesday predicted rates would remain high for at least another six months up to a year. “No matter Chinese companies or the government, they all had better have some good mental preparation for this prospect,” he told a webinar held by the Beijing-based think tank China Centre for International Economic Exchanges. Maritime research consultancy Drewry said freight rates from Shanghai to Los Angeles soared by 242 per cent from a year earlier last week, when its composite World Container Index rose by 360 per cent year on year, having increased for 18 straight weeks. Jia Dashan, vice-president of the China Waterborne Transport Research Institute under the Ministry of Transport, believes it will still prove difficult for rates to return to the lows of 2016-19 even when the coronavirus is brought under control and tensions between cargo supply and demand ease. Newly built vessels and containers entering the market in 2024 will also still not guarantee prices will decline, according to Song Xiaoming, deputy general manager of Guangzhou Port Group. Beijing had already recognised that the skyrocketing freight rates and insufficient capacity represented major risk to the country’s exporters, mostly who are small companies, casting a shadow on the outlook of the world’s second largest economy. “The growth of [exports] is slowing down in the second half of the year, and the situation next year is likely to be very severe,” Commerce Minister Wang Wentao said on Monday. China had already increased monthly container production by 150 per cent to a record of over 500,000 20-foot equivalent units, according to the Ministry of Transport in July. ‘Perfect storm’ as US frozen beef exports to China streak ahead of Australia But the main problem now, according to Liu from China Merchants Energy Shipping, is the congestion at ports due to strict coronavirus control measures and not the number of vessels or containers. Many of the rigid requirements, such as only conducting nucleic acid tests within working hours, could hold up a ship for up to one month, resulting in a large waste of the potential transport capacity. “We call on the state, local governments and port companies to improve the management with more arrangements in targeted pandemic control to increase the efficiency of the current fleet,” Liu said. On Wednesday, the Meishan terminal at China’s Ningbo-Zhoushan port, the world’s third-busiest port in terms of container traffic, reopened following a two-week shutdown after a worker tested positive in mid-August. Global traffic flows had already been disrupted after the month-long shutdown of Shenzhen’s Yantian Port in late May. There is a very big uncertainty, the coronavirus continues to mutate, making our pandemic control very arduous Jia Dashan “There is a very big uncertainty, the coronavirus continues to mutate, making our pandemic control very arduous,” added Jia from the China Waterborne Transport Research Institute, who also noted that the port congestion caused by the pandemic was the main reasons for the shortage in container supply. According to Jia, congestion wasted around one-third of the container capacity in the ocean shipping spot market this year, meaning nearly 30 per cent of demand could not be met. He expects shipping prices to remain high as shipbuilding costs, ship rents and personnel and environmental protection costs have all recently risen sharply. Song also suggested the state of ports in other countries must also be taken into account, especially still struggling to contain the coronavirus. “No matter how good [the situation of] China is, it will be difficult for shipping prices to return to a normal level if logistic efficiency in neighbouring countries or route destination nations is unable to be restored,” he said.