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Global Freight – Market Update
5/16/2022
May 2022
Global Freight – Market Update
As the UK gets over one hurdle, others seem to appear with regularity. We have all had to make major adjustments within the last couple of years, and the next year for varying reasons looks like new challenges will be presented to us with the Ukrainian invasion, cost of living increases, energy price hikes, a recession forecast, and the list goes on. But we are all still here and if the last couple of years have taught us anything, it is how resilient we are.

On a lighter note, it finally gives me a great deal of satisfaction to advise that ocean freight rates are reducing all the time and set to stabilise now for the short-term future. Rates are still nowhere near pre-pandemic levels, but for any of you that receive our newsletters, you will know that we predict that it will be a long, long time before we see rates at those levels again, if ever. We believe that shipping lines have taken this opportunity to increase base rates and introduce a new 'acceptable’ level for ocean freight.

However, from where rates peaked during the pandemic, we are now seeing rates for 40ft containers fall by 50% or more. This could be a temporary lower level of reduction of rates with Shanghai being in lockdown now for over 6 weeks. China’s busiest port and local transport infrastructure being closed have had a clear impact and reduced volumes of goods being manufactured have also impacted the shipping lines with vessels not being at full capacity. When Shanghai does come out of lockdown, we may see a small spike in rates again due to output as demand for space increases. However, we believe rates will still be at much lower levels than we have witnessed over the last 18 months, which for once is a positive!

Airfreight is in high demand, but again, there is light at the end of the tunnel as airlines are once again introducing tariffs rather than us having to obtain adhoc rates or accept express rates to move shipments. Space is still in demand but does seem to be easing as well. 

All in all, a more positive outlook than our previous newsletters. Even with all the doom and gloom surrounding everyday life with ever-increasing costs, our theory is that the high shipping costs have not been reported to the level they should have been, and this has played a part in the very high inflation rates we are witnessing.

Hopefully, with rates coming down, in a few months we will see inflation decrease as well. But, I am by no means a financial expert or a politician, so who knows?

For the latest ocean or airfreight rates, please contact your local JAG UFS office.

Kindest regards

Gary Wilcox
CEO – JAG UFS Intl Limited

 

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