The Dipping Cost of Shipping
A little over one year ago, congestion at America’s West Coast ports were making headlines, and the global cost of shipping containers had reached record highs.
Today, shipping costs have come back down to Earth, with some routes approaching pre-pandemic levels. The graphic above, using data from Freightos, shows just how dramatically costs have fallen in a short amount of time.
The Freightos Baltic Index (FBX)—a widely recognized benchmark for global freight rates—has fallen 80% since its peak in late 2021.
|Shipping Route||Peak Price (Last 90 days)||Recent Price||Change|
|East Asia -> North America West||$2,702||$1,323||-51%|
|North America West -> East Asia||$1,037||$805||-22%|
|East Asia -> North America East||$6,296||$2,812||-55%|
|East Asia -> North Europe||$4,853||$2,978||-39%|
|North America East -> North Europe||$850||$552||-35%|
|North Europe -> North America East||$7,102||$5,507||-22%|
Why Shipping Costs Matter
The vast majority of trade is conducted over the world’s oceans, so skyrocketing shipping costs can wreak havoc on the global economy.
A recent study from the IMF, which included 143 countries over the past 30 years, found that shipping costs are an important driver of inflation around the world. In fact, when freight rates double, inflation increases by 0.7 of a percentage point.
Of course, some nations feel the effects of higher shipping costs more acutely than others. Countries that import more of what they consume and that are more integrated into the global supply chain are more likely to see inflation rise as shipping costs elevate.
Falling Freight Rates Are a Good Thing, Right?
Falling shipping costs are great news for everyone except, well…shippers.
While most of us can eventually look forward to improved supply chain efficiency and less inflationary pressure, shipping companies are seeing the end of a two-year boom period.
For example, major shippers like COSCO and Hapag-Lloyd saw a staggering 10x or more increase in profit per 20-foot equivalent unit (TEU) shipped.
For the time being, carriers are canceling voyages and sending obsolete ships to scrap to keep prices from bottoming out completely. In early January, container spot freight rates rose for first time in 43 weeks, signaling that the rollercoaster ride that shipping rates have been on since the start of the pandemic may be coming to an end.
Visualized: Seaport Trade Traffic by Country
This infographic highlights the countries with the highest container traffic across their ports, thus dominating seaport trade in 2021.
Visualized: Seaport Trade Traffic by Country
According to the World Bank, global seaport trade traffic reached 841 million TEUs (20-foot container equivalent units) in 2021.
In this infographic, Winifred Amase uses that data to highlight the countries with the highest seaport trade traffic.
China Leads All Seaport Trade Traffic
With a third of the world’s total seaport trade traffic surrounding its many ports, it’s no surprise to see China on top of the list.
In addition to owning seven of the world’s 10 busiest ports, the country also owns close to 100 ports across 63 other countries. This brought the country’s container traffic up to 263 million TEUs in 2021.
|Country||20-Foot Container Count (2021)|
|🇺🇸 United States||61M|
|🇰🇷 South Korea||30M|
|🇦🇪 United Arab Emirates||19M|
|🇭🇰 Hong Kong SAR, China||18M|
In second place is the United States, which saw container traffic of 61 million TEUs. Massive U.S. ports in Los Angeles and New York are some of the busiest ports on the continent.
Asian countries dominated the rest of the top 10 list, taking up seven of the remaining eight spots.
Singapore came in third with 37 million 20-foot container units passing through in 2021. The port handled 599 million tonnes of freight, making it the busiest single port in total shipping tonnage.
The ports in Dubai and Abu Dhabi make the United Arab Emirates a key player in Middle Eastern trade. With a container traffic of 19 million TEUs, the UAE is seventh on the list of nations with the highest seaport traffic in 2021.
Markets3 days ago
The $109 Trillion Global Stock Market in One Chart
China4 weeks ago
Charted: Six Red Flags Pointing to China’s Economy Slowing Down
VC+2 weeks ago
What’s New on VC+ in September
Real Estate1 day ago
Ranked: 15 of the World’s Least Affordable Housing Markets
Markets3 weeks ago
The 25 Best Stocks by Shareholder Wealth Creation (1926-2022)
Business2 weeks ago
Ranked: The 20 Best Franchises to Open in the U.S.
Markets1 day ago
Visualizing the Most Sought-After Entry Level Jobs in 2023
Money3 weeks ago
How Much Does it Take to Be Wealthy in America?