June 05, 2023 (MLN): Freight rates have slumped to the lowest level since the first wave of the pandemic, which peaked in April and May 2020, as volumes have shriveled and excess capacity has emerged, as Reuters reported.
In February the freight of a 40-inch container was $1468, and on June 2, 2023, it fell to $1,380.
Global freight volumes show signs of having bottomed out in the first quarter, signaling the industrial cycle may be near its trough, which could provide some support to oil prices later in 2023.
Container flows fell further in January and February compared with the same months a year earlier, showing the inventory-liquidation cycle was not over yet.
At the peak of the pandemic, containers essentially stopped moving, as factories closed and the containers were left stranded at ports.
This restricted global shipping capacity disrupted the flow of containers.
As the global economy started to recover, congestion at ports and labor shortages resulted in an excess supply of containers.
Certain shippers are giving away containers to create space.
Currently, several factories in China are closed or operating at reduced capacity, with full-scale production expected to commence in June.
Throughout this year, leasing companies are witnessing record returns of containers, while carriers are disposing old and surplus boxes in their owned fleets.
