The state of global logistics seems to be returning to some normalcy.

In the last quarter, shipping rates have begun to sharply decrease, falling below pre-pandemic pricing for the first time. Shipping rates are expected to continue to ease for the rest of the year and into 2023. This is typically the peak season for shipping, gearing up for the holidays. However, most shippers have shipped their holiday stocks over the last several months, as Covid supply chain issues drastically changed the typical production and shipping schedules that used to exist. Additionally, as inflation continues to rise across most of the globe, demand for consumer goods has sharply decreased.

Last week, a 40’ container from Shanghai to Long Beach was priced at under $4k for the first time since September 2020. Demand for Chinese goods has begun to dwindle due to inflation and a shift in a higher demand for services than goods. Economic slowdown in China has led to factories scaling back production across the country which in turn has led to slowdowns across the rest of Asia and Europe as well with a decrease in orders from Chinese companies. While US imports have not completely fallen off, the pressure on Los Angeles and Long Beach ports has decreased greatly, signaling they are slowing down to more normal levels. In January 2022, there were 109 vessels in line for the LA ports, now that number sits around 8. 

The sharp fall in spot container rates has led to increased pressure on carriers who pushed customers into long-term pricing contracts when freight rates soared from mid-2021 through mid-2022. Many customers can no longer meet their contractual volumes and in some cases, are paying almost double the current spot market. So, most customers have begun to renegotiate their contracts for lower volume thresholds and lower prices, much to the shipping carriers' dismay.