Ocean Freight Rates Under Pressure

By Phil Franz-Warkentin, MarketsFarm 

Winnipeg, Nov. 22 (MarketsFarm) – Ocean freight rates have come under pressure over the past month, nearing their lowest levels of 2022 as mounting COVID-19 cases in China along with increased restrictions in the country have contributed to concerns over declining demand. 

The Baltic Dry Index (BDI), which is a major indicator of bulk shipping rates, settled at 1,149 points on Nov. 22, marking its ninth-straight decline and only slightly above the yearly low of 965 points hit at the end of August. 

The BDI is compiled by the London-based Baltic Exchange and provides an assessment of the price of moving major raw materials by sea. The overall BDI includes sub-sectors for the different classes of ocean vessels – including capesize, panamax and supramax. It is often seen as a leading indicator of global economic activity. 

Canada is at a freight disadvantage compared to its competitors exporting grains and oilseeds into many markets, with lower freight rates helping counter that disadvantage. 

Container rates have also come down lately as global recessionary concerns and mounting supplies of empty containers at many worldwide ports weighed on prices. 

As of Nov. 17, 2022, Drewry’s World Container Index, which tracks container rates, has fallen by 72 per cent compared to the same time a year ago. The composite index of US$2,591 per 40-foot container compares with the peak of US$10,377 hit in September 2021 and is well below the five-year average of US$3,764. 

Source: DePutter Publishing Ltd.

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