Wednesday, June 29, 2022

Shipping rates retreat from their peak

Supply chain issues have created more demand for exports and driven shipping rates, ultimately reflected in how much a shopper pays for a given good. But those rates are starting to retreat from their peak.

Shipping rate for a 40 foot container from Shanghai to Los Angeles -- a route that Chinese exports are often taken through when sent to US consumers. 

In one way, this is the silver lining of inventory build ups seen across retailers -- there's less demand for more product, which in some ways insulates from shipping congestion and supply chain issues. But it's also helpful to break down inflation as pre-war contributors (shipping rates, demand resurgence) and post-war drivers (oil prices, grains export bans). To see this move in shipping rates could instill some optimism that those pressures are indeed easing. 

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