Factors affecting Sea Freight from China to the USA

Like everything else, sea freight has its cycle of boom and recess.

There are times when it flows smoothly, and there are times when sea freight is just adverse.

Just like any business, several factors contribute to changes in this cycle.

Below given are these factors

Fluctuating fuel prices

Changes in fuel prices is a significant factor that has adverse effects on the sea freight industry.

An increase in fuel prices tends to increase the operating costs of companies in this business.

 Fluctuation in oil prices – Source IIAPS

Shipping companies in this case never fail also to increase their freight rates.

The same applies to when there is a reduction in prices.

Operation costs reduce thus leading to a decrease in sea freight costs.

Customs and taxes

Customs regulations and taxes is an essential aspect of sea freight shipping from China to wherever.

Note that every country has its regulations.

The United States, in this case, has its own set of rules and regulations governing imports from China.

Some of these rules prohibit/restrict the importation of certain goods, i.e., alcohol, tobacco, gasoline, etc.

The set custom duties and taxes also affect the sea freight cost from China to the US.

It also tends to affect insurance fees for the same.

Generally, duties and taxes are very crucial in determining the suitability of importing from China by sea.

U.S. Customs and Taxes – Source Quora

Importers have to calculate the landed cost of their shipment before they begin the shipping process.

Demand and supply

Freight rates are often an outcome of the interaction between demand and supply.

When supply is high costs reduce, when supply is low, freight costs increase.

When demand is high especially when leading up to Chinese holidays, prices increase; when demand is low prices reduce.

Politics

Politics affects so many things.

In the sea freight shipping, political tensions tend to affect the flow of goods, their demand and ultimately the sea freight rates.

Wars, trade agreements, sanctions, and revolutions are some of the events that impact sea freight rates from China to the US.

Chinese holidays

Holidays in the Asian community are very sentimental.

They are taken with great seriousness and tend to last quite long.

The Chinese New Year, for instance, is a holiday that often disrupts the sea freight business in totality.

Factories close for weeks during this period.

Workers go home early and report back late.

The Chinese New Year Holiday

Congestion at the seaports increases as importers tries to get their goods out of the country before the holidays begin.

I mean, it’s often chaos during the pre and post-Chinese New Year period.

Economic changes

Fluctuations in global trade and economies tend to affect the sea freight industry in various ways.

Economic downtimes usually lead to a reduction in sea freight trade activities.

These periods are often a low season for sea freight companies.

During an economic crunch, the level of trade reduces significantly across national borders.

This means that very little freight can be moved from China to the US.

It gets even worse when the dollar weakens.

this happens, the industry has to receive less regarding payment advanced to them by importers.

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