Before the COVID-19 pandemic, shipping freight cost about US$3000 a container. Today the rate sits at US$7000 to US$8000 — and that’s if you can secure a spot on a ship. Photo: EPA/Etienne Laurent
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ETIENNE LAURENT
Elevated ocean container shipping costs and ongoing supply disruptions are set to last at least another 12 months before a ‘normalisation’ occurs, according to new Rabobank research.
The agribusiness bank theorises shipping costs will soften for the Australian agriculture sector soon, but there is “no return” on the horizon to pre-pandemic lows.
Rabobank’s Global Ocean Freight Outlook report estimates global container freight prices will continue to gradually decline over the coming 12 months from the “irrational” highs reached late last year.
Speaking on a newly-released podcast, When Will Container Shipping Get Cheaper and Smoother Again?, RaboResearch global supply chain analyst Viet Nguyen said while prices were not expected to return to the low pre-pandemic rates of about US$3000 a container, they will decline from the current US$7000 to US$8000 per container mark in the year ahead.
There is no expectation prices will return to pre-pandemic lows, with the global container shipping industry now impacted by broader structural factors, including a weaker global economy, higher operational costs, geopolitical uncertainty and imbalanced trade flows.
The report said even though today’s record-breaking high ocean freight rates have already begun to soften, they remain three to five times above pre-2020 levels.
Long-term contract rates have also risen significantly and remain elevated.
The reliability of ocean container freight schedules had dropped from almost 80 per cent pre-pandemic to about 30 per cent as disruptions and uncertainties “cascaded across the globe” and — with continued issues of port congestions and only slow additions of new shipping capacity — have not yet recovered.
