Relief For Businesses As Global Shipping Rates Rapidly Decrease

The backdrop of a possible global recession, enhanced by surging energy prices and rapid inflation, over the past 12 months extremely elevated logistics costs. This has been one contributor to inflation during the pandemic which is now driving the market in which freight rates have just plateaued.

We witnessed throughout the peak of the pandemic that freight rates jumped almost 10-fold during the previous year owing to port backlogs, surges in cargo, and supply chain disruptions. As a result, importers and exporters were found scrambling for space.

The last quarter of 2022, however, is showing spot rates continue to decline with some much needed relief. This may be due to global trade volumes slowing down as a result of shrinking demand for goods, and consumer spending returning to more typical pre-COVID levels as people have resumed more normal daily routines. Strong inflation and higher gasoline prices also caused consumers to cut back on discretionary spending showing how much impact inflation has on consumer behaviour and demands. Another factor to consider is the easing in supply chain disruptions that were built up over the pandemic. When the pandemic boom in demand for consumer products calmed, a lot of the slowdown in container and vessel demand was then seen.

Smart cargo owners started to ship their holiday goods early and inflation has evidently dented consumer demand. This has seen to have had an impact on freight rate drops, as the primary ocean trade channels are now cutting costs during a time typically identified as the peak season in the industry. If you would like to discuss the latest competitive freight rates please contact Image International Freight today!