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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Global shipping rates are on the rise but currently don’t look likely to cause inflation pressures on the scale seen in 2021/2022 due to tighter fiscal and monetary policy but also container costs remain well below the 2021 peaks. But with tensions in the Red Sea unlikely to ease soon and more vessels being rerouted, shipping costs need monitoring and could add to inflation pressures, especially in Europe, after helping to bring it down.
- The Panama Canal, which carries around 5% of global seaborne trade, has reduced shipping traffic due to drought, and the Suez Canal, which sees around 10%, is being heavily impacted by ships avoiding the Red Sea due to Iran-backed Houthi rebels firing missiles at merchant shipping in the Strait of Bab el-Mandeb. As a result there has been a sharp rise in shipping rates, but they remain low and don’t yet seem to be threatening global inflation.
- FBX global container rates have risen 169% since October 7 but the China/east Asia to Mediterranean route has soared 353%. Just in January to date they are 116% and 180% higher respectively.
FBX container rates USD/points
Source: MNI - Market News/Refinitiv
- The levels and rate of increase though remain well below the 2021 highs that helped to drive recent inflation problems and subsequent monetary tightening. Global container rates are 75% lower than the September 2021 peak and the Mediterranean route 50% lower. They rose 435% y/y and 597% y/y in August 2021, well above current increases.
- Falling shipping costs have contributed to reducing G20 CPI inflation from 9.5% in September 2022 to 5.8% in November 2023, this is unlikely to continue through at least the first half of 2024. Shipping contracts tend to be agreed in March and so the Red Sea risks and the costs of rerouting away from the region, which can take 14 days longer, have not been fully priced into shipping costs yet. Watch PMI reports for signs this is impacting producers’ costs.
Global CPI inflation vs container rates y/y%
Source: MNI - Market News/Refinitiv
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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