October 21st, 2021
Hi, this is David! For this week’s chart, the recent blockade at the Suez Canal inspired me to take a look at the global shipping industry.
A few days ago, the world experienced what was probably the most expensive traffic jam ever: the blockade at the Suez Canal. Even after it has been resolved, experts expect the downstream effects of it to be visible for months: shipments are delayed, ports in Europe are congested with arrivals, and sought-after empty shipping containers will not make its way back to East Asia as fast as originally anticipated.
But even before the Suez blockade, surging demand from customers in Europe and Northern America for goods from East Asia sent shipping costs on a rise that reminds more of Bitcoin or GameStop share prices rather than something as usually tame as global shipping:
The above chart shows container freight rates: what it costs companies to send a 40-foot shipping container across various popular trade routes in the world. You can clearly see how costs picked up on the East Asia to Northern America routes from June, and then later even more strongly for shipments to Europe. The data comes from the Freightos Baltic Index: a daily feed of freight rates for various routes around the world.
It will be interesting to see how this will develop in the future: as vaccine roll-outs proceed, economists expect consumer spending to shift back from consumer goods to things like hotels, travel and restaurants, which might give a much-needed break to the shipping industry. But that’s a topic for a different Weekly Chart!
That’s it from me! I’ll hand over to Simon for next week’s Weekly Chart. See you then!