Logistics: It can take 18 to 30 months for the freight rates to return to normal
MEKSEA.COM – Recently, Sea-Intelligence analyzed the composite China Containerized Freight Index (CCFI) to consider how long it will take freight rates to return to normal.
Chart of analysis of each period of freight rates. (photo: Sea-Intelligence.com)
According to Sea-Intelligence analyzers, the rate of decline in terms of the average percentage point drop per week. Over the full period of each of the 5 decline periods. This ranged between -0.4% and -0.9% per week. If these time periods are to reflect the inherent pricing mechanisms in the industry, they can use them to calculate a reversal back to normality.
Previously, the normal rate level represented by rate levels around the 1000 index level. Which is equivalent to -69% compared to currently.
If the decline in rates matches the average seen over the 5 periods of tariff declines, normalization would take at most 26 months. However, it can be argued that the current gain is much stronger than in the past, and that should be taken into account.
Therefore, to get the aim, Sea- Intelligence calculated the average weekly rate increases for the five periods with rate increases.
It will take a long time for the freight rates to return to normal. (photo: internet)
On average, over the five reduction periods, freight rates fell by an average of -0.6 percentage points per week. While in the 5 increase periods Sea – Intelligence saw a 1.1 percentage point increase in freight rates over the same period.
This shows a coefficient of 1.8 between gains and losses. This means that price increases tend to be 80% stronger than declines, on weekly basis. When current rates emerge after a 17-month period of continuous price increases, it will take 30 months to return to the 1000 index.
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By Hayati (Meksea Team)
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