Sea freight will cause serious damage to retailers and manufacturers in 2021. If the past market cycle can be used as a reference, it may take more than two years to return to normal levels.
This is an analysis conclusion of Sea Intelligence. According to the report, during the past five declines in the China Container Transport Index in 1998, the average weekly rate of change was between -0.4% and -0.9%.
Sea Intelligence CEO Alan Murphy said in a statement on Tuesday that applying the 0.9% drop during the 2008-2009 global financial crisis, it will take 18 months to return to normal. It takes 26 months to return to normalization.
In recent weeks, ocean freight rates have fallen from record peaks in September and October. Despite this, the Freightos Index for the most demanded trans-Pacific freight rate is still nearly 300% higher than a year ago.
Sea Intelligence takes into account the strength of the market’s latest gains and combines the gains of the past five periods. Murphy said that since the current level of freight rates is the result of continuous increases in 17 months, it is expected that it will take 30 months to return to normal levels.
