By Richie Lin.    Photo：Robert So

Last week, the whole market focused on the possible railroad strikes might happen on September 16th if the negotiation between railroad unions and major railroad companies such as UP, BNSF, CSX, NS don’t progress well. Just on the morning of September 16th, news came out saying that strikes were averted because unions and companies reached a tentative agreement to keep on negotiating. This was a huge relief for the market because if the strikes had really happened it would be a disaster for the global supply chain and choked the whole economic movements not only in USA but all over the world. Under the destruction of inflation and fear of recession, world economy cannot endure a disaster again to create bottlenecks in the logistics and push up freight charges and eventually drive up the consumer prices. In August, CPI (Consumer Price Index) in USA was announced 8.3%, which is higher a little bit than the number in July and market expectation. Therefore, everybody is expecting FED will raise another 3 base points on the interest rate to suppress the inflation and drag down economy development. However, unlike everybody’s expectation, retail sales number in August was still promising compared Year to Year and Month to Month, even though market assumed the inflation will scare people to spend less money on non-daily products. Retail sales number in August was increased 9.1 % compared with last August and increased 0.3% compared with July, 2022. It might be because the job market in USA recently is still strong, so consumer is still willing to spend money on products. Some people are wandering if consumers are still buying products and need international logistics, how come the freight rate has kept dropping since May 2022. This has political and economic reasons. Politically, inflation has made people all over the world upset about their lives. And in democratic countries such as USA, elected officials shall respond the resentment or they will be kicked out of the government by votes. Therefore, we can see FMC try to use political pressure to limit the freight rate to control the inflation because transportation cost in every sector of supply chain will end up a huge increase on the consumer price. As a result, shipping lines were forced to drop the rate reluctantly. Economically, inflation really reduced the spending of customers and ease of port congestions made products come to shore earlier than planning. Importers and retailers need to adjust their inventory, therefore reduced the transportation arrangement. Since there are not so much demand in the freight market, shipping lines and airlines were forced to drop the rate to pursue the limited demands. And shipping lines have profit buffers in first and second quarters 2022 to digest the cutting throat competition in third and fourth quarters. We are not sure if shipping lines will keep dragging down the rate or maintain current rate level until the end of 2022. But we are sure every industry will be adjusted to the balance of supply and demand in the end no matter how much profit you can earn during a short time.

Ocean FCL market rate reference in week 38:

• Asia main ports to USAWC USD 3500~4500 per 40GP; 
• Asia main ports to USAEC USD 8000~9000 per 40GP; 
• Asia main ports for IPI points of USA is USD 9500~12000 per 40GP. 
• Asia main ports to Europe base ports and West Mediterranean: USD 8000~11000 per 40GP. 

Please note above rate is only for reference, carriers might only give space for higher rate, which will be from USD 5,500~12,500 per 40GP for different destinations.

Airfreight market rate in Week 38:

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

• PVG/SZX/HKG/TPE to LAX USD 5.3/kg, 
• PVG/SZX/HKG/TPE to ORD USD 5.8/kg, 
• PVG/SZX/HKG/TPE to JFK USD 5.3/kg.

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