Steep drop in container freight rates: Global container freight rates have plummeted to levels even lower than pre-pandemic rates, currently standing

Incredible Plunge: Container Freight Rates Back to Pre-Pandemic Lows

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2023-06-04 16:00:06

Steep drop in container freight rates: Global container freight rates have plummeted to levels even lower than pre-pandemic rates, currently standing at only $1,380, an astonishing 88% decline from their peak just two years ago in September 2021.

Why it matters: This significant decrease in container shipping costs is a double-edged sword, as it places pressure on the industry's investments in safety measures and decarbonization initiatives.

Factors contributing to the decline: A combination of economic and geopolitical uncertainty, coupled with a decrease in demand, has led to excess capacity and falling freight rates, making it over 80% cheaper to ship a container between Asia and Europe or the US in April 2023, compared to the same time last year (AGCS).

The role of larger vessels: The trend towards larger, more efficient container ships has been reinforced by the current downturn, as well as goals to meet decarbonization targets (AGCS). This shift, while potentially positive for risk quality and stabilization of freight rates, poses challenges to the industry's environmental, social, and governance (ESG) credentials.