Many cross-border e-commerce sellers once dreamed of counting profits during the traditional "golden September and silver October" peak season. Instead, they've faced a harsh reality: plunging freight rates and a disappointing sales season. The days of container shortages and skyrocketing shipping costs have vanished. What forces are driving this dramatic reversal?
The Shipping Price Collapse: Identifying the Culprits
Over the past 200 days, ocean freight rates have experienced a continuous decline, leaving many e-commerce sellers struggling. Those who anticipated substantial Q3 profits found neither the expected seasonal surge nor stable shipping rates. Several key factors explain this market shift:
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Inventory Glut: The Cancellation Wave
Pandemic-era consumption spikes led retailers to overstock. As consumer behavior normalized, these excessive inventories became liabilities, triggering mass order cancellations and reduced shipping demand. -
Overcapacity: Shipping Lines' Expansion
The previous shipping boom prompted carriers to aggressively expand fleets. This capacity growth outpaced demand, creating oversupply that depressed rates. -
Economic Headwinds: Weak Container Demand
Global economic uncertainty, particularly inflation in key Western markets, has eroded consumer purchasing power, leading to fewer international orders and reduced container needs.
The Bullwhip Effect: Amplifying Market Imbalance
Major retailers like Walmart, Best Buy, and Amazon now grapple with overflowing inventories and declining sales—Walmart canceled billions in orders. This situation reflects the "bullwhip effect," where supply chain information delays and distortions cause excessive inventory buildup. Retailers based orders on outdated demand projections, creating inventory explosions when actual consumption patterns emerged.
Mixed Impacts: Who Benefits From Lower Rates?
Industry analysts suggest West Coast U.S. route rates may dip below $2,000. Current China-to-U.S. West Coast rates average $3,441, with the global container index at $4,262—down 28% and 61% year-over-year respectively. While significantly lower than 2021's peak of $20,000 per 40-foot container, rates remain above 2019's $1,200 average. For some sellers, this means lower operational costs, but the broader industry still faces challenges.
Future Outlook: A Return to Normalcy?
With persistent U.S. inflation and Federal Reserve tightening measures suppressing demand, further rate declines appear likely. However, this adjustment occurs gradually rather than abruptly. Analysts note that post-pandemic consumption patterns are stabilizing faster than anticipated, accelerating freight rate normalization. While multiple factors—inventory corrections, overcapacity, economic conditions, and supply chain dynamics—drove the downturn, cross-border e-commerce operators must now focus on adapting to market shifts and optimizing supply chain strategies.