Sea Freight Prices Plunged By 70% In 2022

The world’s major shipping companies saw their fortunes soar in 2021, but now those days seem to be over.
With the World Cup, Thanksgiving and Christmas season just around the corner, the global shipping market has taken a chill, with shipping rates plummeting.
“The freight of Central and South America routes from $7,000 in July, has fallen to $2,000 in October, a decline of more than 70%,” a shipping forwarder revealed that compared with the Central and South America routes, European and American routes began to decline earlier.
Current transportation demand performance is weak, most of the ocean route market freight rates continue to adjust the trend, a number of related indexes continue to decline.
If 2021 was a year of clogged ports and hard to get a container, 2022 will be a year of overstocked warehouses and discounted sales.
Maersk, one of the world’s largest container shipping lines, warned on Wednesday that a looming global recession would drag down future orders for shipping. Maersk expects global container demand to fall 2%-4% this year, less than previously expected, but could also shrink in 2023.
Retailers such as IKEA, Coca-Cola, Wal-Mart and Home Depot, as well as other shippers and forwarders, have bought containers, chartered container ships and even set up their own shipping lines. This year, however, the market has taken a nosedive and global shipping prices have plummeted, and the companies are finding that the containers and ships they bought in 2021 are no longer sustainable.
Analysts believe that the shipping season, freight rates are falling, the main reason is that many shippers were stimulated by last year’s high freight, have many months in advance of the shipment.
According to US media, in 2021, due to supply chain impacts, major ports around the world are clogged, cargoes are backloaded and container ships are being seized. This year, freight rates on sea routes will jump by about 10 times.
This year manufacturers have learned the lessons of last year, with the world’s biggest retailers, including Wal-Mart, shipping goods earlier than usual.
At the same time, the inflation problems plaguing many countries and regions around the world have hit consumer demand far less eager to buy than last year, and demand is much weaker than expected.
The inventury-to-sales ratio in the U.S. is now at a multi-decade high, with chains such as Wal-Mart, Kohl’s and Target stocking up on too many items that consumers no longer desperately need, such as everyday clothing, appliances and furniture.
Maersk, based in Copenhagen, Denmark, has a global market share of about 17 per cent and is often seen as a “barometer of global trade”. In its latest statement, Maersk said: “It is clear that demand has now reduced and supply chain congestion has eased,” and that it believes maritime profits will decline in the coming periods.
“We are either in a recession or we will be soon,” Soren Skou, Maersk’s chief executive, told reporters.
His forecasts are similar to those of the World Trade Organisation. The WTO had previously forecast that global trade growth would slow from about 3.5 per cent in 2022 to 1 per cent next year.
Slower trade could help reduce upward pressure on prices by easing pressure on supply chains and reducing transport costs. It also means the global economy is more likely to shrink.
“The global economy is facing a crisis on multiple fronts.” “The WTO warned.

Post time: Nov-22-2022