Shipping Prices Have Decreased By More Than 50 Percent This Year

Shipping Prices Have Decreased By More Than 50 Percent This Year

Shipping prices have decreased by more than 50 percent this year

Shipping or freight rates continued to decrease as global trade volumes slow it down following the reduction in the demand for goods, showed the latest data from S&P Global Market Intelligence.

Although the freight rates have also dropped due to the relaxation of the disturbances of the supply chain that were built during the pandemic, a large part of the slowdown in containers and ships was due to a weak cargo movement, according to the research group.

Baltic Dry Index

BDI-Baltic Dry index, known as the indicator of transportation charges in the freight market, has moved towards a downward trend after reaching its highest level since 2008 with 5,650 points at the start of last October. The index, which is one of the main indicators of the global economy, is at the level of 2,200 points at the beginning of the year, while it remains at the level of 1,213 points on 9 September.

Freightos Baltic Global Container Index Value (40 -inch HC Container Cost), which measures container transportation tariffs on 12 important marine routes of global trade, is $ 9,293 earlier this year, but down below $ 5,000 on 9 September.

Once again, according to the index, the cost of containers from China to the region of the west coast of the United States decreased by around 60% compared to January 2022, to the level of 4 thousand dollars.

Container costs sent from Asia to Europe dropped more than 50 percent to less than $ 8,000.

Globally, more than 90% of all goods are transported by ship, which is why the shipping of containers is considered to be a vital element of world trade.

WTO Trade Barometer

World Trade Organization’s latest Goods Trade Barometer revealed in August that the volume of world merchandise trade has plateaued. Year‐on‐year growth for the first quarter of the year slowed to 3.2%, down from 5.7% in the final quarter of 2021.

While the WTO had forecasts according to which world trade increase this year, the uncertainty surrounding those forecasts have increased due to “the current conflict in Ukraine, an increase in inflationary pressures, and a tightening of the expected monetary policy In advanced economies, ”mentioned the barometer report.

Causes of Recession

Experts stated that the foundation of the potential global recession caused by high inflation dragged the price of the goods down, slowing the growth of demand for consumer products after COVID-19, and retailers and producers supplying their goods earlier than usual contributed to this decline.

On the other hand, China currently controls around 54% of the capacity of the ordered ship containers, while the disturbance in China due to the Zero Covid-19 policy in Beijing negatively affects the world supply chain.

Shipping prices have decreased by more than 50 percent this year