A little over one year ago, congestion at America’s West Coast ports was making headlines, and the global cost of shipping containers had reached record highs.
Today, shipping costs have come back down to Earth, with some routes approaching pre-pandemic levels. The graphic above, using data from Freightos, shows how dramatically prices have fallen in a short time. The Freightos Baltic Index (FBX)—a widely recognized benchmark for global freight rates—has fallen 80% since its peak in late 2021.
Falling shipping costs are great news for everyone except, well…shippers.
While most of us can eventually look forward to improved supply chain efficiency and less inflationary pressure, shipping companies are seeing the end of a two-year boom period.
For example, the major shippers like COSCO and Hapag-Lloyd saw a staggering 10x or more increase in profit per 20-foot equivalent unit (TEU) shipped.
For the time being, carriers are cancelling voyages and sending obsolete ships to scrap to keep prices from bottoming out completely. In early January, container spot freight rates rose for the first time in 43 weeks, signalling that the rollercoaster ride that shipping rates have been on since the start of the pandemic may be coming to an end.
Source: Visual Capitalist. The complete article is available HERE.