In major Western ports and elsewhere, empty containers are piling up along the quays. The current situation no longer resembles the post-Covid overwork, when demand had exploded and maritime transport was running at full speed.
In one year, the international transport of goods has plummeted by 85% due in particular to inflation, a drop in demand and a slowdown in world trade.
The transport market has always been cyclical, but it has recently experienced strong variations. “The average container price over ten years has risen from $1,600 to more than $10,000 in 2022, before falling currently to around $2,000,” noted Stéphane Graber, general manager of the International Federation of Freight Forwarders and Associates Associations (FIATA).
Stocks that are difficult to dispose of
The rise in transport prices was at first vertiginous, caused by port congestion and difficulty in the movement of ships. The fall that followed was all the more brutal. The stagnation, even the recession of the world economy partly explains the decrease in international trade and demand for containers, comments Philippe Chalmin, specialist in raw materials, who also underlines that the gradual reopening of Chinese ports during 2022 has accelerated falling prices.
The 10-year average container price rose from $1,600 to over $10,000 in 2022, before currently falling back to around $2,000
These might also continue to fall to a natural floor rate, operators refusing to run boats at a loss.
According to Stéphane Graber, transport companies have failed to better anticipate this situation, because demand has been frenetic. At the beginning of last year, all the shops wanted to ensure that they had enough stock of goods for their Christmas sales, which ended up being worse than expected.
“Today, shipping companies are trying to reduce capacity, in particular by eliminating voyages or slowing down boats in an attempt to lengthen journeys,” reports the director of FIATA. But this is not enough to empty the warehouses.
Low influence on the price of goods
And rapport of the United Nations Conference on Trade and Development (UNCTAD), published at the end of November 2022, shows that grain prices and shipping costs have contributed to raising inflation by almost 1.5%, which which might suggest that lower transport prices would lead to lower commodity prices.
However, this cascading effect does not necessarily work, says Stéphane Graber, because some players are blocked by high-priced contracts and because the costs of inventory of goods are also high. “Compensation for lower fuel and transport prices is thus absorbed by storage prices,” he summarizes.
The compensation for lower fuel and transport prices is absorbed by storage prices
Philippe Chalmin, more optimistic, believes that there will be a “small positive effect” on the price of goods.
Decarbonization, a possible future cost
In the long term, transport prices should increase once more due to the decarbonisation of maritime transport, according to Stéphane Graber. “This cost will have to be absorbed by the market and it is consumers, freight forwarders and shippers who will have higher prices,” he said.
But while 30% of the world’s fleet should be renewed in the coming months, the freighters currently produced in shipyards are no more ecological than the previous ones.
It is also unlikely that shipping companies will use part of the profits made over the past two years to invest in decarbonisation. A major conference is due to bring together the main maritime players in Geneva around this subject next March.
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