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Market Insight June 2022

Supply chain bottlenecks are helping to prop up

freight rates, but they are clearly not having quite the same influence on pricing as they did previously, as evidenced by falling spot rates over the past few months. The situation is still bad enough to prevent a precipitous collapse in short-term rates, but it seems that sentiment for the global economy and container demand is reasserting itself as a pricing driver. Things that might extend the supply chain recovery

timeline include China’s refusal to budge from its zero-covid policy that, as we have seen, can create disruption at any time, and the port labour contract negotiations going on for the USWC, the main gateway for US container imports. Life in a high-inflation world increases the risk of labour shortages arising from industrial action as new wage demands pile up. Already, the logistics sector has endured strike action (or threats) at German ports, railways in the UK, and by Korean truckers. Looking further ahead, we do foresee a significant loosening of the container market from the second half of 2023, when the supply chain congestion is expected to have cleared. It will also coincide with a significant influx of newbuild containerships.


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