Ocean freight rates, which have harmed retailers and manufacturers during 2021, could take over two years to return to normal levels.
Citing analysis from Sea-Intelligence, Bloomberg notes that during the past five downturns in the composite China Containerized Freight Index going back to 1998, the average weekly rate of change ranged between minus 0.4% and minus 0.9%.
More specifically, as Sea-Intelligence CEO Alan Murphy explained, applying the 0.9% drop seen during the global financial crisis of 2008-09, “it would take 18 months to get back to normal”.
If, however, the rate of decline matches the average seen over the five rate decline periods, then normalization would take as much as 26 months
What is more, Mr. Murphy added that because “the current rate level comes after a 17-month period of sustained rate increases, the result becomes 30 months before a reversal”.
Container shipping rates have fall recently from record peaks during September and October. However, a Freightos index of transpacific rates, where demand is the strongest, are almost 300% higher than a year ago.
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