High ocean freight rates to normalise in around two years

25 Nov 2021 CW Team

The high ocean freight rates in 2021 may take more than two years to normalise if past market cycles are any guide. It is the analysis of the Sea Intelligence, which is a Copenhagen-based maritime data and advisory firm.

During the last five downturns in the China Containerised Freight Index, the average weekly rate of change ranged between -0.4% and -0.9%.

CEO of Sea Intelligence, Alan Murphy, said that the 0.9% decline during the global financial crisis of 2008-09 then would take 18 months to normalise. If the rate of decline is similar to the average seen over the five rate decline periods, it will take about 26 months to normalise.

The container shipping rates have dropped in the past few weeks from their highest peak in September and October. However, the Freightos index of transpacific rates, which has the strongest demand, is about 300% higher than a year ago.

Sea Intelligence in the strength of the market's latest price hike and compared to the past five periods of increase. Murphy said that the current level comes after 17 months of the sustained rate increase, resulting in becoming 30 months before normalising.

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