Ocean Freight Rates Report

Period : 1st Jan 2020– 31st Aug 2022

Date : 3rd Sept 2022

Researcher : Esther Low

Source : Freightos Baltic Index https://fbx.freightos.com/freight-index/

Global Average Rates of Ocean Freight

Global container freight rates have continued to ease since March 2022. The highest

reported freight rates were in Sep-21 where freight rates hit $11,109. According to Reuters,

the weaker consumer spending is putting downwards pressure on demand and

subsequently freight rates. Echoing this sentiment Rodolphe Saade, CEO of CMA-CGM said

that the global decline in consumer spending will lead to more normal international trade

conditions in the second half of 2022 as well as to a downturn in shipping demand.

Ocean Freight Rates for Far East Region

(China/East Asia ↔ North Europe)

Ocean freight rates for routes East Asia/China to North Europe have marginally eased to

high $9,600 - $10,000 in Jul and Aug 22.

Meanwhile rates for return route from North Europe to China/East Asia has increase again

from the lowest of $485 in Jul 22 to $701 at the end of Aug 2, a 44% increase.

Ocean Freight Rates for Pacific Region

(China/East Asia ↔ North America East Coast)

Freight rate for the China/East Asia route to North America east coast experienced a

significant decline from $16,705 to $11,599 (a 31% drop) from Jan 22 to June 22. This

decline has since slowed down, freight rates for the route as of 31 st Aug 22 is $9,085, a

45.6% decrease from Jan 22.

For the return route North America East Coast to China/East Asia, freight rates have

remains range bound between $750 - $ 1000 throughout 2022.

Ocean Freight Rates for Atlantic Trade

(Europe ↔ North America East Coast)

Freight rates for the Atlantic trade routes North Europe to North America east coast

remains elevated throughout 2022. As of 31st August, freight rates were $8,346.

Meanwhile for route North America east coast to North Europe, freight rates has dropped

from $756 at the beginning of August 22 to $511 towards the mid of August. However it has

since rallied upwards towards the end of August 22. As of 31st of Aug 22 freight rates were

$604.

Freight market outlook

Freight rates have generally eased towards the mid of 2022 due to the cooldown of

consumer spending. However, there are both upwards and downwards pressure in play

with a stronger downwards pressure on freight rates in the near future.

On the upwards pressure, sanctions placed on Russia (which is the 3rd largest producer of

oil and gas) has push oil prices higher and cause a global energy crisis. Should oil prices

rebound again it could lead to more expensive international shipping and less sailing

routes/frequency. This will further exacerbate any imbalance of supply and demand of

containers.

Meanwhile in the US, warehouse space remains scarce and rail backlogs are a growing

problem. On top of this labor disputes may further disrupt ground transport which

ultimately will cause fluctuations in transit time for imported and exported goods.

On the other hand, freight rates could face further erosion due to lower demand for

containerized goods owing to higher inventory levels globally. The reduction in global

consumption due to macroeconomic uncertainties and risk of recessions in the US, Europe

and China will also add to the lower demand for containerized goods.

Supply of containers have also improved since the height of the pandemic but is still limited

by the increase of vessel waiting times compared to pre-COVID. The other limitation to

supply of containers is its usage as storage of goods due to the warehouse scarcity in the

US.

As the global freight market continues to find its balance, we foresee that freight rates will

continue to ease due to the threat of economic slowdown, reduction in consumption and

high inventory levels. Although this would be good news for many importers, we do not

think that freight rates will return to pre-COVID levels.