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Shipping rates from China spike ahead of US holiday season

The coronavirus pandemic has triggered a spike in international shipping rates that risks impacting Christmas sales and the global economy.

The capacity to move cargo from China to the U.S. has decreased due to a decline in the number of container ships making runs. As a result, shipping rates are surging.

The voyage from China to the U.S. West Coast takes around three weeks

The voyage from China to the U.S. West Coast takes around three weeks. The lengthy trip tends to create a demand spike for space on container ships heading in that direction from July through October, when U.S. retailers prepare for Black Friday.

Day after America’s Thanksgiving holiday the country’s busiest shopping day

The day after America’s Thanksgiving holiday has the reputation of being the country’s busiest shopping day. Traditionally, it is the day many retailers move into the black for the year, thus the name.

This year, Black Friday lands on Nov. 27.

According to Freightos, a cargo information company, the shipping rate for a 40-foot container in late September reached $3,900, an all-time high and almost three times more than the rate of 12 months earlier.

The surge is due to shipping companies that responded to the pandemic by cutting back on voyages. In May, the number of voyages was around 20% fewer than what had been planned before the pandemic.

U.S. stores are already running low on supplies

U.S. stores are already running low on supplies. In July, their inventories were down more than 10% year-on-year as the inventories-to-sales ratio fell to 1.23, its lowest reading since 1992. The shipping industry’s shrunken capacity now has these merchants struggling to purchase goods and fill their shelves.

Many retailers considering extending discount campaigns through the end of the year

In some areas of the U.S., big-box chain stores like Best Buy and Home Depot have sold out of dishwashers, microwave ovens and refrigerators. The work-from-home trend has caused demand for home appliances to increase, but orders can take a few months to arrive. Given the shortages, many retailers are considering extending discount campaigns through the end of the year. Extending sales periods would also help stores to deter crowds and maintain social distancing standards.

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