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Global oil prices rise, collection and transportation costs soar, industry calls for higher freight rates

iconOct 29, 2021 13:27

Recently, a reporter of the Financial Associated Press visited a number of collection and transportation enterprises and learned that the current oil price is at an all-time high, and the cost pressure of the inland container transport industry has increased sharply. A number of people in the transportation industry said in an interview with the Financial Associated Press that the current increase in oil price costs reached 30%, resulting in excessive inland transport costs, and recent calls for higher freight rates in the industry.

A reporter from the Financial Associated Press interviewed the relevant responsible persons of a number of collection and transportation enterprises, and a number of industry insiders said that the increase in freight rates was under discussion and was expected to increase by 8-10% on the original basis. Most people in the industry believe that this price increase is not high compared with the increase in oil prices.

However, some collectors believe that for the collection and transportation enterprises in the upper reaches of the supply chain, the bargaining power is not strong, and it is not easy to raise prices, and it is still unknown whether the above price increases can be implemented.

Fourteen increases in oil prices during the year, the transportation industry is overwhelmed.

According to the price monitoring center of the National Development and Reform Commission, international oil prices continued to rise sharply after the National Day. On average, WTI oil prices in Brent in London and New York are 7.83 per cent higher than in the last price adjustment cycle.

In this context, the oil price of domestic finished products has been raised accordingly. It is understood that the oil price adjustment is 300 yuan per ton for gasoline and 290 yuan per ton for diesel. Equivalent to 92 gasoline rose 0.24 yuan / liter, No. 0 diesel rose 0.25 yuan / liter.

This is the 14th price increase of oil products this year. In 2021, gasoline prices have increased by 2000 yuan per ton, and diesel prices have increased by 1925 yuan per ton. After the arrival of the new round of price increases, the price of automotive diesel in most parts of the country is about 7.2 yuan / liter, and the retail price limit of No. 92 gasoline is between 7.3 yuan / liter and 7.5 yuan / liter.

For the future performance of oil prices, a number of analysts believe that oil prices continue to rise in the future, on the demand side, winter in the northern hemisphere is approaching, energy demand is increasing, and shortages of natural gas and coal are triggering additional demand for petroleum products; on the supply side, the implementation rate of OPEC+ production reduction in September is 115% less than expected.

The most sensitive to oil prices are logistics collection and transportation enterprises. The head of a global rapid transit transportation team told the Financial Associated Press that the current surge in oil prices has a great impact on the collection and transportation industry. Generally, the fuel tank of trucks is 300-500 liters, and the cost of adding a tank of fuel costs 3,000 to 4,000 yuan, which creates a huge cost pressure on drivers.

According to statistics, diesel oil has increased significantly from 4300 yuan / ton in 2020 to 7500 yuan / ton now. According to the estimates of senior people in the industry, the cost of fuel has increased from 130 yuan to 220 yuan for 100 kilometers, that is, the cost has increased by 90 yuan.

As a result of the recent rise in oil prices, most of the collection and transportation enterprises can no longer afford the increased costs. In mid-October, the Container Branch of Shanghai Transportation Industry Association issued a notice in the hope that all member units will adjust the operation-related expenses reasonably. According to the notice, the cost of fuel per 100 kilometers has increased by 70%, and freight charges need to be increased by about 21% in order to stabilize the increased costs.

In addition, Shenzhen, Guangzhou, Wenzhou and other places have issued relevant announcements advocating an increase in freight rates.

In fact, the collection and transportation industry, as the upstream of the logistics industry chain, is constantly compressing the bargaining power of truck drivers from downstream pressure and horizontal competition pressure. at present, truck drivers can only control their own costs, "long-distance work has stopped running", "freight costs do not rise, many drivers do not want sports cars" is the common aspiration of many drivers.

Freight rates rise one after another, the shipper's delivery cost increases.

In fact, although a wide range of price increases have not yet been implemented, some enterprises have chosen to increase prices first. Shen Jin, general manager of Cameron Shanghai Port, told the Financial Associated Press that there have been some price increases, with a range of 5-8%.

Since the beginning of this year, many enterprises have encountered difficulties in shipping due to the high freight costs and insufficient transport capacity, and the difficulty of finding a box. Now the pressure of the rising cost of inland container transportation may once again fall on the shoulders of enterprises.

At present, the freight that the shipper needs to pay is mainly composed of sea freight, shore freight, dock fee, customs declaration fee and so on, among which sea freight and shore transportation are the main components of the freight. The increasingly severe pressure of inland transportation is another major problem facing China's logistics supply chain. Industry insiders believe that the rise of land transport costs may lead to the rise of the overall freight rate.

A freight forwarder in Shanghai Port told the Financial Associated Press that the main cost of the freight forwarder quotation is sea freight, followed by shore freight, and this cost is likely to be borne by customers. Therefore, if the price goes up, the quotation for the customer will also be raised.

In terms of the overall freight rate, the shipping price, as the main component of the freight rate, although it began to fall in the past month, it is still high. For the major foreign trade enterprises and shippers, the overall freight rate is still very high. On October 28th Drury released its latest global container index, (WCI), at $9669.47 per 40-foot container, down 2% from last week, but still up 276% from a year earlier.

In addition, the rise in oil prices has not only affected the foreign trade market, the inland express logistics industry has also been affected. It is understood that express delivery companies have recently focused on increasing express delivery fees, and a reporter from the Financial Associated Press learned through a number of express delivery outlets and some e-commerce platform merchants that express companies such as "access Department" have issued notices to increase express charges.

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