Shipping Rates Dropped By 25% But Supply Chain Crisis Still Prevails
The cost incurred to shift containers across the Pacific Ocean dropped by over a quarter in the past seven days, the biggest decline in about two years, observed by the Wall Street Journal. This is applicable for premium, not contract to buy, rates; most flooring importers do not purchase at such a premium rate.
The decline indicates that the rising demand for Asian exports has started easing. However, shipping executives have reportedly said that it will take months for the logjam of vessels outside major US ports to ultimately clear up.
The drop in the ocean-freight rates has coincided with the winding down of conventional peak shipping season that starts from August when Western importers begin loading cargo before the year-end holiday season. With most items being in transit, space is slowly opening up, leading to lower prices.
The cost incurred to move a container from China to the West Coast of the US has dropped by 26% last week when compared to that of the preceding week reported at $13,295. The data was provided by the Freightos Baltic Index. The numbers are still over three times as high since the beginning of 2021 when it would have been charged at $4,200.
It is the first instance of decline from June.
The ongoing demand to secure space on ships has lately been so significant that several retailers were seen chartering their own vessels to bring in gadgets, decoration items, and similar hot-selling cargo ahead of Christmas.
Jonathan Roach, a London-based container analyst employed at Braemar ACM Shipbroking has observed that the inventory numbers indicate that major retailers seem to have stocked up and pre-ordered even during port delays.
The US Census Bureau has also said that freight forwarders along with analysts have observed that there have been fewer vessels with short-term charters sailing across the Pacific following the rise in wholesale inventories by 13% year-over-year in September.