Why Freight Prices Soared and What’s Next for 2024 | Global Supply Chain Insights (Part 2)

As the world grappled with the chaos of a global pandemic, many believed the end was near. Stricken with fear, shipping lines made drastic moves by scrapping vessels to cut costs, anticipating a complete halt in global trade. But as lockdowns dragged on, consumer behaviour shifted dramatically. Bored and isolated, people began spending at unprecedented rates, leading to a surge in demand that the diminished fleet couldn't handle. Shipping prices skyrocketed to historic levels so much so that even offering $25,000 for a 40-foot container couldn’t guarantee space.

During this time, shipping lines experienced profits like never before, throwing money around, buying planes, and venturing into air freight. But as we move into 2024, the market has taken a different turn. Initially, fears of economic collapse slowed down spending, causing shipping prices to drop drastically. However, recent geopolitical events, such as the Red Sea disruptions, combined with the massive export of electric vehicles from China, have created new challenges. Shipping lanes have become congested, especially in hubs like Singapore, leading to delays and increased costs.

So, where do we go from here? Prices will likely remain high for the rest of 2024, with a sharp drop expected around Christmas, only to rise again post-Chinese New Year. Traders should strategize shipping timelines carefully to avoid unnecessary costs. Stay informed and plan—2025 could bring even more unpredictable shifts in the market.

0:00 Post Covid
1:59 Market Update
3:29 Macro Elements
6:00 Conclusion

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