Choppy waters ahead for shipping, but rates to stabilise above pre-pandemic levels

AFTER a tumultuous two years which saw freight rates hit record highs, the good news is that shipping prices appear to have stabilised. The bad news is that the longer-term, 30-year trend of shipping getting cheaper will not resume.

Container freight rates have fallen by between 40 and 80 per cent in the last six months. But this was from record highs, fuelled by an earlier surge in consumer demand and supply chain congestion issues caused by Covid-19.

Now, freight demand has softened due to lower end-consumer demand, fears of a recession and built-up inventories. At both the retail and wholesale levels, inventories are at record highs after a period of panicked stocking-up that lasted until early this year.