{"id":30300,"date":"2023-10-12T00:00:00","date_gmt":"2023-10-12T00:00:00","guid":{"rendered":"http:\/\/test.tranistics.com\/nvision\/2023\/10\/12\/why-low-freight-rates-for-container-shipping-are-unsustainable\/"},"modified":"2026-01-30T12:06:13","modified_gmt":"2026-01-30T12:06:13","slug":"why-low-freight-rates-for-container-shipping-are-unsustainable","status":"publish","type":"post","link":"http:\/\/test.tranistics.com\/nvision\/2023\/10\/12\/why-low-freight-rates-for-container-shipping-are-unsustainable\/","title":{"rendered":"Why Low Freight Rates for Container Shipping Are Unsustainable"},"content":{"rendered":"<div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-1 fusion-flex-container nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"--awb-border-radius-top-left:0px;--awb-border-radius-top-right:0px;--awb-border-radius-bottom-right:0px;--awb-border-radius-bottom-left:0px;--awb-flex-wrap:wrap;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start fusion-flex-content-wrap\" style=\"max-width:1248px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-0 fusion_builder_column_1_1 1_1 fusion-flex-column\" style=\"--awb-bg-size:cover;--awb-width-large:100%;--awb-margin-top-large:0px;--awb-spacing-right-large:1.92%;--awb-margin-bottom-large:0px;--awb-spacing-left-large:1.92%;--awb-width-medium:100%;--awb-spacing-right-medium:1.92%;--awb-spacing-left-medium:1.92%;--awb-width-small:100%;--awb-spacing-right-small:1.92%;--awb-spacing-left-small:1.92%;\"><div class=\"fusion-column-wrapper fusion-flex-justify-content-flex-start fusion-content-layout-column\"><div class=\"fusion-text fusion-text-1\" style=\"--awb-text-transform:none;\"><p>The pandemic years were an incredible boon for ocean freight operators. Spiking demand sent spot prices soaring, while port congestion and tangled supply chains compounded accessorial charges and other fees. But just as the pandemic ended, so too have the sky-high container-shipping rates of the era. Today, they\u2019re back at pre-pandemic levels and falling even lower. Although this is good news for shippers, all signs point to a lack of sustainability in bottomed-out prices. If ocean rates don\u2019t rebound soon, there will be broader implications for the economy.<\/p>\n<p><img decoding=\"async\" class=\"aligncenter size-full wp-image-30976\" src=\"http:\/\/test.tranistics.com\/nvision\/wp-content\/uploads\/2023\/10\/shutterstock_1840604107-1.jpg\" alt=\"\" width=\"800\" height=\"440\" \/><\/p>\n<h2>Why Rates are Low?<\/h2>\n<p>Container-shipping rates have been declining since the spring of 2022 and are now at multiyear lows. Numerous factors have contributed to this decline, including:<\/p>\n<ul>\n<li><strong>Weakening demand for imports:<\/strong> The global economy has slowed, leading to a decline in demand for imports. This is especially true for the world\u2019s largest exporter, China.<\/li>\n<li><strong>Increased supply of container ships:<\/strong> There\u2019s now a surplus of container ships and capacity on those ships, which has continued to put downward pressure on rates.<\/li>\n<li><strong>Improved port congestion:<\/strong> Port congestion has eased in recent months, helping to lower rates. Fewer barriers to drayage have reduced total landed costs.<\/li>\n<\/ul>\n<p>It\u2019s important to note ocean freight rates are cyclical and likely to fluctuate in the near term. Even though the expectation is these rates will remain low through 2023, there\u2019s hope they will stabilize later this year.<\/p>\n<h2>The Sign of a Slowing Economy<\/h2>\n<p>Low container-shipping rates are typically a hallmark of a slowing economy, largely because they signal a decrease in demand for imports. Along with overcapacity across all ocean lanes, shipping companies are forced to compete for customers, thereby driving down prices. Unfortunately, this has broader implications for the economy.<\/p>\n<p>Historically, low freight rates have correlated with economic contraction.<\/p>\n<ul>\n<li>In 2008, the global economy experienced a recession, while ocean freight rates fell by 40%.<\/li>\n<li>In 2015, China\u2019s economy slowed, and ocean freight rates dropped by 20%.<\/li>\n<li>In 2023, the global economy is slowing down again, with ocean freight rates falling 30%.<\/li>\n<\/ul>\n<p>Although low container shipping rates aren\u2019t always a sign of a recession, they\u2019re often an indicator the economy is slowing. The longer rates stay depressed, the larger the negative implications are for the broader economy.<\/p>\n<h2>Rates Can\u2019t Stay Low Forever<\/h2>\n<p>Depressed ocean freight rates are a great opportunity for shippers. But in the long term, they pose a danger to economic viability. The implications of low rates include:<\/p>\n<ul>\n<li><strong>Job losses in the shipping industry:<\/strong> Already saddled with crewing issues, shipping companies can\u2019t afford job losses. An inelastic workforce is at risk as rates remain low.<\/li>\n<li><strong>Disruptions to global supply chains:<\/strong> When shipping companies are unable to profit, they\u2019re less willing to invest in new ships, leading to potential shipping delays.<\/li>\n<li><strong>Weaker economic growth:<\/strong> The inability of shipping companies to profit from transoceanic voyages creates trade imbalances, which can weigh heavily on the economy.<\/li>\n<\/ul>\n<p>Low container rates are both a sign of a stagnated economy and a contributor to one. As the United States hopes to continue stabilizing its economy post-pandemic, freight rates must rise to a healthy level before they contribute to an economic backslide that kicks off a recession (or depression). Thankfully, this is exactly what they\u2019re expected to do in the back half of 2023.<\/p>\n<div class=\"cta\">Looking to optimize your container operations around the current (and future) rate environment? nVision Global can help you make the most of the situation so you can manage your freight operations efficiently, regardless of uncertainties or changing variables in the landscape. To learn more <a href=\"https:\/\/corporate.nvisionglobal.com\/supply-chain-contact-us\/\" target=\"_blank\" rel=\"noopener\">contact us<\/a>.<\/div>\n<\/div><\/div><\/div><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":30976,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[],"class_list":["post-30300","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-freight-costs"],"_links":{"self":[{"href":"http:\/\/test.tranistics.com\/nvision\/wp-json\/wp\/v2\/posts\/30300","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/test.tranistics.com\/nvision\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/test.tranistics.com\/nvision\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/test.tranistics.com\/nvision\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/test.tranistics.com\/nvision\/wp-json\/wp\/v2\/comments?post=30300"}],"version-history":[{"count":0,"href":"http:\/\/test.tranistics.com\/nvision\/wp-json\/wp\/v2\/posts\/30300\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/test.tranistics.com\/nvision\/wp-json\/wp\/v2\/media\/30976"}],"wp:attachment":[{"href":"http:\/\/test.tranistics.com\/nvision\/wp-json\/wp\/v2\/media?parent=30300"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/test.tranistics.com\/nvision\/wp-json\/wp\/v2\/categories?post=30300"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/test.tranistics.com\/nvision\/wp-json\/wp\/v2\/tags?post=30300"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}