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Ocean shipping rates have plunged 60% this year
- mwcremer 4y agoThe cost of shipping items by ocean, or the number of items shipped by ocean? Ah, English...
- nyokodo 4y ago> Freight rates on the main ocean trade routes are sinking during what is typically the industry’s peak season after cargo owners shipped holiday goods early and inflation dented consumer demand.
- underyx 4y agoEven this doesn't disambiguate. The answer is that it's about the cost of shipping: > The cost to ship a 40-foot container from China to the U.S. West Coast now stands around $5,400 a box, down 60% from January, according to the Freightos Baltic Index.
- nwiswell 4y agoI would guess that a 60% reduction in ocean freight volume could only be the result of the worst global depression since the industrial revolution. I got curious: Year | Billions of tons 2020 | 10.65 2019 | 11.07 2018 | 11.02 ~~~ 2010 | 8.4 2009 | 7.86 2008 | 8.23
- photochemsyn 4y agoSo what's the historical variation on rates? This article headline means nothing without that basic datum.
- bruce511 4y ago>>... While still above pre-pandemic levels... This endless comparison between "this year" and "last year" seems both meaningless and ripe for headlines when comparing in-pandemic with out-pandemic years. I get it. 2020 and 2021 messed up just about every statistic ever. In 2021 we get articles about massive rate hikes, in 2022 we get more articles about massive rate falls. 2020 was like an earthquake. Such a massive disruption will have second, third, fourth order effects for a while. But measuring "earth shaking has dropped by 90% since 5 minutes ago" isn't really information of any use. On the other hand "all buildings are restored to pre-earthquake levels, please carry on as normal" is both highly useful, and won't make it to the front page.
- ralusek 4y agoThere are a fair few questions for which direction is more important than magnitude. That being said, I'll take both if possible.
- idontwantthis 4y agoRelevant XKCD https://xkcd.com/2502/ https://xkcd.com/2502/
- conception 4y agoTransporting a 40-foot steel container of cargo by sea from Shanghai to Rotterdam now costs a record $10,522, a whopping 547% higher than the seasonal average over the last five years.” Between Asia and North America, Bloomberg reports that “contract rates…are coming in around $2,500 to $3,000 for a 40-foot container—25% to 50% higher than a year ago…” - from January This seems like a non-story. Rates were insane due to Covid. Things are now normalizing. The rate is still incredibly expensive and should fall more.
- conductr 4y agoWould be nice if authors just compared things to 2019 or at least added that comparison to their report, this is how businesses look at their own numbers every since 2020.
- phpisthebest 4y agoThat would not fit their narrative though. Cherry picking data to fit your point is stats 101 for "journalists"
- ProjectArcturis 4y agoWhat agenda do you think Costas Paris of the Wall Street Journal is pushing here?
- addisonl 4y agoThere doesn't need to be a hidden agenda—they simply want eye-catching headlines to drive clicks to their site.
- ProjectArcturis 4y ago"Ocean shipping rates have plunged 60% this year" -- I guess that's somewhat more eye-catching than "Worthwhile Canadian Initiative", but not by much.
- xnx 4y agoFrom https://www.statista.com/statistics/1250636/global-container-freight-index/ https://www.statista.com/statistics/1250636/global-container... Costs peaked at 5x the pre-pandemic value, and are now down to 3x the pre-pandemic value.
- tuatoru 4y agoThank you! You have a talent for precis!
- diogenescynic 4y agoIs this an early indicator for any other price drops?
- aaaaaaaaata 4y agoTrafficked people?
- 01100011 4y agoJust a reminder that price drops and slowing inflation are definitely welcome but we should consider the drivers behind them. Supply shortages may be easing or demand might be slowing. Depending on the reason, slowing demand can be an indicator that the economy is beginning to roll over and die. That is sort of the intent behind fed tightening, and some slowdowns are expected, but I just want to throw it out there that price drops aren't necessarily a cause for celebration.
- davewritescode 4y agoIn this case prices falling is likely a good thing. One of the reasons shipping prices are so high is because suppliers are shipping earlier than they would to make sure they hit the market on time. There's no use trying to meet demand for back to school season if your products can't make it to the shelf until October. This massively pulls demand forward puts stress on already stressed infrastructure and ultimately pushed shipping costs through the roof. As the supply chain stabilizes, suppliers will start building in less buffer for shipping problems and costs will ultimately go down.
- randomopining 4y agoI don't know specifics but it sounds like this is simply the rebound effect after covid etc. Demand fell, shipping messed up, demand skyrockets, shipping gets congested and super expensive. Stores have too much inventory, people have less money or perceived money from stock/crypto gains... now demand falls back to a reasonable level while supply chains are less congested Means we are going back to normal.
- greenyoda 4y agoArchive with full text of article: https://archive.ph/wlCqS https://archive.ph/wlCqS
- Helmut10001 4y agoWell, and they climbed 60% last year, so we're back to 'normal'. See the Baltic Dry Index [1]. [1]: https://tradingeconomics.com/commodity/baltic https://tradingeconomics.com/commodity/baltic
- wcoenen 4y agoInteresting how that index had a massive spike and crash in 2008. As if the global economy seriously overextended itself and then faltered. I hadn't realized how much activity in the real world was linked to the financial excesses that were going on before the debt crisis.
- tempestn 4y agoJust a nitpick: if something climbs by 60% and then falls by 60%, it hasn't returned to the original level, but to 1.6 * 0.4 = 64% of the original. (Rates rose more than 60% in 2021, as your chart shows. As well as showing how much information is lost when just considering the annual change!)
- rcarmo 4y agoA friend of mine in the logistics business says that we’re still at 10x what the per-container shipping rates were in early 2020 for some routes, and that fuel prices and personnel are now becoming a significant part of the overhead again.
- randomopining 4y agoFuel is super high, but isn't extraordinarily high right. And congestion sounds like it is less.
- chii 4y agoSo does that mean that the prices for such shipping is unlikely to drop in the short to medium term? Fuel prices don't look to be falling by much with the ukraine war, and personnel costs wouldn't drop until inflation drops.
- piokoch 4y agoOne way on looking on that is that it is bad, as cargo prices are very large. But, as in case of every problem, there is an opportunity here: we can shorten supply chains. Maybe established western Europe companies can have suppliers from Poland, Slovakia, Estonia, Ukraine, Morocco or Algeria instead of China or India or Vietnam. Shorter route, more eco, as less fuel will be burned, if production is just around a corner it is easier to make sure manufacturing does not violate workers rights, does not abuse children, does not use slave workers. And we can stop feeding Chinese communistic regime, we see how dependence on country like Russia ends up.
- durnygbur 4y ago> Maybe established western Europe companies can have suppliers from Poland, Slovakia, Estonia, Ukraine These sources of cheap labor are already dried up. The managerial slumlords treating lower ranks like trash have troubles finding more subordinates, e.g. ask Musk how it's going hiring Poles and Ukrainians at his Branderburg's manufacture.
- quickthrower2 4y agos/plunged/reverted/ Clickbait
- Steve44 4y agoI can put some perspective on how this is affecting prices. I work for a food-2-go supplies business, we sell packaging to coffee shops and the like. Most of our products are UK made and although we don’t directly import anything a few of our suppliers do. An example is one 40ft container will hold about 750 cases of 500 x 12oz double walled paper coffee cups, in 2019 would cost us about 30GBP per case wholesale delivered to our UK warehouse. To ship a 40ft container from China into the UK pre COVID was around $1500-$2000. It started rising as COVID hit (for quite a wide number of reasons all combined) and last year it was peaking at $25,000, most of the year is seemed to be about $20,000. It has dropped over the recent few months,as the article says, but is still very high. At $2,000 shipping per 750 cases out of the £30 cost that’s about $2.66 / £2.30 per case in container shipping costs. At the peak it worked out to be about $33 / £29 per case. You can see that doubled the UK landed price of the product and so our costs rocketed up.
- cheschire 4y agoDid your prices increase to maintain the profit per unit, or did your profit per unit increase / decrease after your price hikes?
- Steve44 4y agoWe have had to increase prices, but on most things aren't maintaining the normal percentage margin. We've really trimmed down on some products, which is making it tricky because our operating costs are going up too. Most people in the supply chain are doing the same, 'breathing in' and hoping we get through this mess.
- deelowe 4y agoI'm guessing they took a hit to margin, but even if you take the margin to 0, you're still not helping. Most companies who are in the business of importing/exporting goods are going to be in the sub 10% range. When shipping prices go up like they have, you're literally off by an order of magnitude. Single digit margin cuts isn't going to make a dent.
- mkl95 4y agoStill 4x+ February 2020 rates, so let's hope they keep plunging.
- JAA1337 4y agoTangential - but /should/ shipping rates be low? Doesn't it make sense for it to be expensive to move something from one side of the world to the other? For example - invasive species, like Asian Carp. Would they be so prevalent fresh water bodies around the world if we shipped (by sea) as much as we have in the past? Cost of labor. If it was cost prohibitive to ship across the world, wouldn't much more get manufactured locally? Wouldn't there be more attention to a living wage in developed countries?
- nradov 4y agoAsian carp were intentionally brought to the US for aquaculture in the 1970s. Some of those fish then escaped into other bodies of water. The cost of ocean shipping had nothing to do with it. https://nyis.info/invasive_species/asian-carp/ https://nyis.info/invasive_species/asian-carp/
- JAA1337 4y agoThank you, I didnt know that. How about other invasive species? How about zebra muscles: https://www.usgs.gov/faqs/what-are-zebra-mussels-and-why-should-we-care-about-them https://www.usgs.gov/faqs/what-are-zebra-mussels-and-why-sho...
- nradov 4y agoThe Ballast Water Management Convention is intended to prevent ships from introducing any more invasive species like zebra mussels. https://www.imo.org/en/MediaCentre/HotTopics/Pages/BWM-default.aspx https://www.imo.org/en/MediaCentre/HotTopics/Pages/BWM-defau...
- JAA1337 4y agoThank you for the response. In all seriousness, you are giving me an education on shipping that I did not have. However, to my point, is it possible that invasive species would be less infested in freshwater areas had we as a species done much less sea based transport because it was cost prohibitive?
- gunshai 4y agoI have a buddy that just left flex port telling me they are buckling down for winter in hopes to outlast other companies in hopes to gobble up market share as they fold. He's been talking to me about this for a little bit now it seems to me globalization is in a bit of a bear market for the first time in what 80 years?
- insane_dreamer 4y agoMisleading title; rates still have a ways to fall to regress to the pre-covid mean.
- fallingfrog 4y agoOh by "rates" they mean "cost". I read that as "the rate of items shipped per day has plunged by 60%", which would be far more concerning. Written by a business major.