Falling ocean freight rates suggest that global trade is slowing, and could be a sign of a recession as consumer demand is softened by rising costs of living and inflation.
CNBC Citing the latest data from S&P Global Market Intelligence, ocean freight rates continue to decline as global trade volumes slow due to falling cargo demand.
While freight rates have also come down as supply chains have been untangled in the wake of the pandemic, most of the decline in container and vessel demand has resulted from weaker freight activity, according to the research team.
“Congestion at ports, demand, as well as reduced arrivals are among the main reasons for low rates,” S&P Global said.
“Based on lower trade volume expectations, we do not expect severe congestion in the following quarters. [tại các cảng],” the report said.
Rates for container ships and dry bulk carriers have fallen over the past three months and peaked earlier than expected in the second quarter. “Due to the seasonality of the market, dry bulk freight rates usually peak in the third quarter. However, according to the data, the second quarter is likely to be the highest rate quarter in 2022,” S&P said.
S&P Global’s Freight Forecast Model also predicts that the Baltic Dry Index, a measure of the price of shipping raw materials by sea, will decline by 20%-30% for the year and will recover only slightly by 2024.
These signs underscore the growing risk of a global recession as consumer demand eases amid rising inflation and the cost of living.
One of the signs of a global recession is sluggish trade growth. The World Trade Organization (WTO) Commodity Trade Indicator released in August shows that global commodity volumes have been roughly flat.
The annual growth rate in the first quarter of 2022 has slowed to 3.2%, from 5.7% in the fourth quarter of 2021. The WTO attributes part of the slowdown to the Ukraine conflict and the COVID-19 lockdowns in China.
Although the WTO predicts that global trade will grow this year, there is still a lot of uncertainty surrounding this forecast because of “the ongoing conflict in Ukraine, rising inflationary pressures and tightening activity.” policy in developed economies”.
S&P Global Market Intelligence echoed these concerns: “We expect improvements in the dry bulk market in the coming months. However, freight rates will decrease in the short term due to the weakness of the real estate sector in China as well as the ease of congestion.”
Therefore, any change in China’s Zero COVID policy or the ceasefire in Ukraine could also support freight rates. However, any slowdown in commodity and consumer demand will push freight rates lower, S&P Global said.
Pressure on the global supply chain seems to be easing.
On the bright side, pressures on supply chains have eased somewhat, though remain at record highs, according to the New York Federal Reserve Bank of New York’s Global Supply Chain Pressures Index.
According to VietnamBiz.vn
