Freight rates and port congestion to continue decline into 2023
Prices of shipping containers have fallen by two-thirds this year after reaching figures tenfold on major trade routes during 2021, according to Investors’ Chronicle. Rates slowly began falling in the third quarter of 2022 and are expected to continue to drop, the outlet reports.
The estimated cost of shipping a 40 foot container from China to the U.S. West Coast has dropped by 84% since the start of April to $2,470, according to Freightos Baltic Index.
Although the rate is 86% lower year-on-year, it is still 80% higher than in October 2019, before the onset of the pandemic.
Shipping container prices for routes between China and northern Europe began their decline in January, Freightos’ head of research Judah Levine said.
The executive quoted the hit to disposable incomes from higher inflation and the shift in spending from goods to services as the two main factors for the decrease.
Consequently, as lower demand sets in, the congestion issues that have affected major ports around the world is also starting to ease. Prior to the pandemic, only around 3% of global container ships were held up due to this problem. Today, this affects 8% of vessels, a considerable drop from 14% in January 2022.On the other hand, contract rates are also in decline. Shipping data firm Xeneta’s index tracking contract rates from China to Europe recorded its biggest ever month-on-month drop of 8% in October. However, the figure is still 64% higher than in January 2022.