By Richie Lin

Don’t always anticipate the blinking fireworks anymore, this is time to check if we have enough resources to go through the economic downturn and catch up another opportunity of economic expansion.

In May, the annual growth rate of CPI (Consumer Price Index) in USA reached 8.5%, which is the highest point in 40 years. Some even expect it will reach 9% in June. This ever-escalating inflation pushed Federal Reserve announce raising 3 base points of interest rate to withdraw money from the market in order to control the inflation. In addition to QE from USA, there are two other powers to push up the CPI to current level, one is the war between Russia and Ukraine and the other is supply chain breakdown caused by Covid-19. War Between Russia and Ukraine drives up the price of oil and commodities and supply chain breakdown drives up the price of products imported to USA. For Oil price, Biden administration ask the OPEC and USA producers to raise up the supply. AS for the price of imported products, Shipping lines have made themselves the target on the radar because they reported historic profits in 2021 and first quarter of 2022 to make public in USA think they are exploited by the shipping lines. Serious inflation has become major issue for the midterm election in 2022, then Biden will definitely ask shipping lines to increase the supply of space to drive down or at least maintain the rate. USA Congress has passed the law and Biden will sign it soon to give FMC more power to investigate Ocean freight market. Maybe FMC will not interfere the rate directly but shipping lines will face more pressure if they use blank sailings again to manipulate the space and rate. There are hundreds of thousands empty containers laying in ports of USA, which cannot be moved back to Asia because there are no enough vessels to USA. And the exporters in USA also complained shipping lines rejected their bookings all the time because they preferred to taking containers back to Asia instead of waiting for export products. Rate will be likely facing downward pressure because of high inventory level for retailers and political pressure to provide more supply in the space. For everyone in the supply chain, we need to realize the outburst in 2021 was the short-term bounce back from the panic for the covid in 2020. Economy will need 3~4 years to adjust to the normal, and economy will definitely face some recession during the adjustment. Don’t always anticipate the fireworks anymore, this is time to check if we have enough resources to go through the economic downturn and catch up another opportunity of economic expansion.

Ocean FCL rate reference in week 25:

• Asia main ports to USAWC USD 7500~12500 per 40GP; 
• Asia main ports to USAEC USD 10000~13500 per 40GP; 
• Asia main ports for IPI points of USA is USD 14500~17500 per 40GP. 
• Asia main ports to Europe base ports and West Mediterranean: USD 10000~14000 per 40GP.  

Please note above rate is only for reference, carriers might only give space for higher rate, which will be from USD 10,000~20,000 per 40GP for different destinations.

Airfreight market rate in Week 25:

Airfreight rate might increase abruptly without further notice. The following market rate for your reference. 

• PVG/SZX/HKG/TPE to LAX USD 7.7/kg, 
• PVG/SZX/HKG/TPE to ORD USD 8.6/kg, 
• PVG/SZX/HKG/TPE to JFK USD 8.4/kg.

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