According to the most recent statistics from S&P Global Market Intelligence, freight rates have continued to decline as global trade volumes stagnate as a result of declining consumer demand for commodities.
Although freight rates have decreased as a result of the easing of supply chain disruptions brought on by the pandemic, the study team found that a large portion of the slowdown in container and vessel demand was caused by reduced cargo flow.
“Much reduced port congestion level, along with weaker cargo arrivals, was one of the major reasons behind significant decrease in freight rates,” S&P stated in a Wednesday note.
“Based on expectation of weaker trade volume, we do not expect extremely high congestion again in the coming quarters.”

Container and dry bulker freight rates have decreased over the last three months, according to S&P, who also noted that prices peaked earlier than anticipated in the second quarter. Dry bulkers are ships that transport raw materials and bulk commodities.
“Due to the seasonality of the market, dry bulk freight rates would typically peak in the third quarter; however, according to S&P Global Market Intelligence’s latest dry bulk freight market outlook, the second quarter would likely be the peak of 2022,” the firm said.
The Baltic Dry Index, a barometer for the cost of shipping important raw materials by sea, is likely to decline by 20% to 30% this year before modestly increasing in 2024, according to the company’s Freight Rate Forecast models.
This emphasizes the growing dangers of a worldwide recession as consumer demand declines in the face of rising living expenses and inflation.
The World Trade Organization’s most current Goods Trade Barometer, a benchmark that offers real-time statistics on the trajectory of merchandise trade, recently emphasized that stagnant global trade growth is a crucial indicator of a worldwide slump.
The global commerce in goods has reached a plateau, according to the barometer report that was published in August. The first quarter of the year saw year-over-year growth drop to 3.2% from 5.7% in the final quarter of 2021.
It blames epidemic lockdowns in China and the turmoil in Ukraine for some of the slowdown.
The WTO had predicted that this year would see an increase in global commerce, however uncertainty surrounding that estimate has intensified due “to the ongoing conflict in Ukraine, rising inflationary pressures, and expected monetary policy tightening in advanced economies,” stated in the barometer report.

These worries were mirrored by S&P Global Market Intelligence.
“Although we expect some seasonal improvements in the dry bulk market in coming months, volatile path to lower rates is expected in the near term due to slower-than-expected economic growth with continued weakness in mainland China’s real estate sector as well as the absence of high congestion,” S&P Global Market Intelligence’s principal shipping analyst, Daejin Lee, made the statement.
As a result, any modifications to China’s Covid-zero policy or cease-fire agreements in the Russia-Ukraine war could increase dry bulker freight costs once more, but any additional weakening in the demand for commodities and consumption would drive rates lower, according to S&P.
The Federal Reserve Bank of New York’s most recent Global Supply Chain Pressure Index shows that, while they are still at historically high levels, global supply chain pressures are continuing to decrease.