Once again the Container Freight rate market shows some interesting trends as displayed in the Chart, comparing Drewry and Freightos indexes.
Even considering the unchanged geopolitical conditions affecting the shipping markets (particularly the Red Sea crisis and the Panama Canal drought), the rates show a marked reduction over the past few months. The Panama Canal is now viewing normal transit volumes for container vessels, easing the market offer shrinkage, which is also expected to be impacted by the future restoration of the Suez Canal. In addition, some more macroeconomic factors are starting to kick in, in this case reducing the container market demand.
Concerns about a global economic slowdown (worsened by inflation and geopolitical tensions) and uncertainty are decreasing consumers’ demand for goods, with retailers adjusting their inventory level for a lower demand. From another perspective, some companies are shifting their sourcing and manufacturing strategies to avoid long-haul shipping routes also affecting the most remunerative trades like the Asia-Europe one.
Shipping capacity, supply chain dynamics, and macroeconomic conditions are actively playing a role in this volatile freight market, meanwhile, the container players are trying to exploit the positive quarterly results to prepare for future turbulences.
