Supply Chain Impact: Container Rates Surging
The latest data from Drewry’s World Container Index shows a surge in maritime shipping costs across key trade lanes, especially to the U.S. As the chart below shows, lanes between Asia and the US have jumped in the last week through July 2nd.
Rates from Shanghai to the US East Coast were up a “modest” 56% Y/Y and jumped 11% in just the last week. But the big story is Shanghai to the U.S. West Coast, where rates are up 100% from this time last year (10% higher W/W).
Other rates between Asia and Europe are still significantly elevated.
Global Economic Trends
The U.S. and global economies have endured a great deal of transition and uncertainty, and nearly all of it has been “unnatural” in the sense that it has been driven by policy decisions rather than major movements by consumers or businesses. The impact of tariffs, trade wars, and the actual war between the US and Iran has dominated economic behavior around the world.
Only a month or so ago, the data was still trending benignly. The GDP numbers still pointed to growth of more than 3.5%; inflation was higher but not yet at record-setting levels; jobless numbers remained near record lows; and employment growth seemed steady every month.
Suddenly, all that seemed to change. Not that some of this was not expected. There was certainty that the oil crisis would reverberate through the economy sooner or later, and now it has. The other signs of distress had been building as well. Now the GDP estimate for the second quarter is 1.6% instead of 3.6%, inflation is headed towards 4.0%, and job growth has fallen drastically (a fourth of what had been predicted).
Read more on how news, developments, and other global items are affecting your supply chain.
