Freight Prices Are Returning To Normal, Which Is Welcome News

The current price of a 40 foot container is now only 5 percent above 2018 levels.

Asia-US West Coast prices decreased to $2516, which is nearly 85 percent lower than the same time last year.

If you follow my firm’s work, you probably know our obsession with freight pricing data. We recently brought Freightos onto our podcast “Inside Scoop.”

Each week, we get pricing updates across the freight industry to understand the current pricing dynamics. The importance of this data is that every output cost for goods and services is a function of the input cost to create that good or service.

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The main transport mode for global trade is ocean shipping: Around 90% of traded goods are carried over the waves.” – Via OECD

Today’s data highlights how pricing has circled back to pre covid levels, which is much earlier than most had predicted. Below is a headline from March 2022. Since then, rates have fallen nearly 85%.

There are several implications here. First, this should be a welcoming sign to inflation concerns. It shows the power of problem solving as ports and companies like Freightos.

The second is similar but more micro in thinking. As supply chains ease this removes a significant hurdle for companies that buy and sell physical goods. Delivery times from port to port have decreased sharply, allowing for companies to order goods closer to the expectation of selling.

freightos baltic index freight costs chart

While the global economy has plenty of work to do, this is a welcome development.

Twitter:  @_SeanDavid

The author or his firm may have positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.