By Richhie Lin.    Photo：Pixabay

When the pandemic began in the early 2020, shipping lines, airlines, railways, and trucking companies all chose to cut the supply of manpower and resources to endure the impact of decreasing demands. However, the lockdowns caused by pandemic didn’t exacerbate the logistic industry but boost the demand for more space due to the compensations from governments and well-developed e-commerce. And surging demands created consequentially the supply chain gridlocks because shipping lines, airlines or any part in logistics have restricted the supply of space to cut the expenses. Since there was less supply of space and personnel to handle the arrangements, we saw severe port congestions, railroad bottleneck, lack of chassis, lack of trucks and other kinds of logistic disasters all happened from third quarter of 2020 till the first quarter of 2022. This unprecedented consumptions pushed up the demand of containers and gave shipping lines once in a lifetime opportunity to make big fortunes, which was around 19 billion in 2021. However, the surging demand in USA and Europe worked with high gasoline price caused by war between Russia and Ukraine has pushed up CPI dramatically in 2022, for example, USA reached 8.3% in August and England even reached over 10%. High inflation rate in major economies pushed their Central Banks to increase the interest rate for withdrawing money from markets to control expenditures and consumptions. We can see the yearly rate of increased durable goods orders has begun to drop from the high 22% to around 8.5% in August 2022. This numbers show companies still give and receive orders but the increased rate has gradually become flat from the peak. And PMI (Purchasing Manager Index) also shows the economy is slowing down from 60.7 in April 2021 to 50.9 in September 2022. With reference of durable goods orders and PMI, we can easily make a conclusion that the economy is slow now, even not into recession. According to the latest number published on July 9th, the UI Claims were 244,000 people, which already increased for 4 consecutive months since March, 2022. Therefore, the UI Claims also indicates the economy is not positive because there are more and more people got layoffs, then have to claim the unemployment insurance. If people are forced to claim the unemployment insurance, they will definitely cut down their spending on durable goods, then companies will cut down their productions and purchase orders. Once people begin to restrict on buying things, the economy will begin to spiral down subsequently. Right now, everybody agrees the economy in 2022 will not be better than 2021. Some people are even worried that economy will face recession at the end of 2022 or at the beginning of 2023. No industry can escape the rules of supply and demand, the invisible hands of price in the economy. After customers reduced their consumptions because of higher inflation, demands for logistics arrangements dropped consequentially. Therefore, the price is on the way to decrease when supply is adjusting to match the demand. Shipping lines will keep use blank sailings or just skip calling some ports to maintain the supply of space to avoid breakdown of ocean freight rates. Surely, economy is adjusting to normal from the unprecedented booming, and everybody will feel pressure under the transition if they don’t have enough resources to go through the winter. Like a movie series said “Winter Is Coming.”

Ocean FCL market rate reference in week 41:

• Asia main ports to USAWC USD 2500~3500 per 40GP; 
• Asia main ports to USAEC USD 6500~7500 per 40GP; 
• Asia main ports for IPI points of USA is USD 7000~10000 per 40GP. 
• Asia main ports to Europe base ports and West Mediterranean: USD 6600~7000 per 40GP. 

Please note above rate is only for reference, carriers might only give space for higher rate, which will be from USD 4,000~11,000 per 40GP for different destinations.

Airfreight market rate in Week 41:

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

• PVG/SZX/HKG/TPE to LAX USD 5.1/kg, 
• PVG/SZX/HKG/TPE to ORD USD 5.3/kg, 
• PVG/SZX/HKG/TPE to JFK USD 5.4/kg.

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