High rates well into 2024?
Starting out from the China Containerized Freight Index, the Copenhagen-based shipping consultancy Sea-Intelligence has defined five periods each of sustained rate decreases and of sustained rate increases, specially the average percentage point drop per week over the full periods. This ranged between -0.4% and -0.9% per week.
If these time periods are accepted as the inherent pricing mechanisms in the industry, the reversal back to normality can be calculated. During the global financial crisis of 2008-2009, rates declined at the fastest rate of a weekly decline of -0.9%, and if this speed of decline is applied to the current rate levels, it would take 18 months to get back to “normal”.
If, however, the rate of decline matches the average seen over the five rate decline periods, then normalisation would take as much as 26 months.
Yet, as the current rate level is achieved after a 17-month period of sustained rate increases, a return to "normal" may be expected in 30 months." (sh)