The cost of gasoline, groceries and just about everything else is rising, but container freight rates are starting to fall, the Wall Street Journal (WSJ) reported Friday (April 15).
Data from the World Container Index (WCI), a resource for independent container market data, showed that Americans and other consumers in developed countries may be spending less on goods.
Reasons include the disappearance of stimulus funds; inflation at 40-year high eroding wage gains; and the Federal Reserve Board’s aggressive rate hikes.
Another factor could be the COVID-19 lockdown in Shanghai, disrupting the flow of goods from China and reducing the need for container shipping.
The WCI is down 16% since January. The main routes from Shanghai to Los Angeles and from Shanghai to New York are down 17% and 16%, respectively.
However, the most dramatic statistic is that the WCI is down 13% since March 10th. It suggests that retail sales will suffer in the spring or that the outbreak of the pandemic in China is having a bigger impact on global supply chains than many expected.
George GriffithsEditor-in-Chief of Global Container Freight Markets at S&P Global Commodity Insights, told the news agency there is evidence shipping companies continue to let ships sail but are not loading or unloading containers at ports.
The WCI is higher than it was before the pandemic more than two years ago. Nonetheless, the price is expected to continue trending lower.
This week, data from PYMNTS showed that consumers are buying less and spending more. According to the report, consumers spent more on groceries and retail items in March, and retail spending hit an all-time high.
Continue reading: New data shows consumers are buying less, spending more and changing their habits
This could spell trouble for retailers if inflation persists and consumer spending softens. The dollar has less purchasing power and many consumers are cutting back on spending. Inflation has had a significant impact on Americans’ spending across all channels and categories.