By Richie Lin.    Photo：Jan van der Wolf

For the students majoring in the economy in the universities, they will need to study Macroeconomics and Microeconomics. Macroeconomics include GDP growth rate, CPI (Consumer Price Index), interest rate, etc. Macroeconomics seem far away from our daily life but they actually influence economic decisions of governments, companies and each one of us. For example, USA announced CPI in September was 8.3% and core CPI such as food, house, gasoline reach 6.9%, which is the highest in 40 years. Higher CPI means there is inflation happening in USA. How to suppress inflation has been the Federal Reserve’s major problem for several months. FED keep increasing the interest rate to reduce the spending of companies and consumers. CPI will be pushed up once again if companies and consumers are still easy to borrow money for investment and consumptions. Therefore, market expects FED will increase 3 base points before the end of 2022 and the interest rate will reach 4.5% in 2023. High interest rate is the weapon for FED to cool down the inflation because high inflation (over 3%) will restrict the expenditures and consumptions then exacerbate the economy in the long term. Higher CPI and higher interest rate work together to reduce the investment and consumption, and will consequentially reduce the demands of international ocean freight and airfreight services. Since people already spend most of their money on the food, house, and gasoline, they will reduce the spending on durable goods such as furniture, home decorations and cars. We can see major retailers in USA have much inventory to digest and must use discount to attract people to buy products. Therefore, importers in USA will reduce their orders for new products and the arrangements of ocean freight and airfreight because they have no need to build up inventory for consumers within a short time. Historically, there will be a peak season for international logistics between July and December because importers need to build up inventory for the consumptions of Halloween, Thanksgiving, Christmas and New Year. However, there is no sign of peak season in 2022 because consumptions were oppressed by higher inflation. Based on above analysis, we can say surely CPI will really influence and predict the situation of ocean freight and airfreight market. We can say freight rate will maintain in the low level for several months if not falling again because there are less bookings in the market.

Ocean FCL market rate reference in week 42:

• Asia main ports to USAWC USD 2000~3000 per 40GP; 
• Asia main ports to USAEC USD 6200~7000 per 40GP; 
• Asia main ports for IPI points of USA is USD 7000~9500 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 42:

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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