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Container ship traffic jams are decreasing - and freight rates are falling

The freight rates in container shipping, which rose sharply after the outbreak of the pandemic, are falling significantly.

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Container ship traffic jams are decreasing - and freight rates are falling

The freight rates in container shipping, which rose sharply after the outbreak of the pandemic, are falling significantly. In addition, the freighter traffic jam in the German Bight is slowly easing, as the Kiel Institute for Economic Research (IfW) announced on Thursday. The background is the stagnating world trade. According to IfW calculations, around twelve percent of all goods shipped worldwide are still stuck in traffic jams at important container ports.

According to the latest Kiel Trade Indicator, the September values ​​​​were slightly negative compared to August for Germany's imports and exports at minus 0.5 and minus 0.1 percent respectively. A similar picture emerges for the EU. On the other hand, there is more movement in the USA, where imports are down 4.4 percent, and in China, where imports are up 3.9 percent. Russia can expect a slight increase in both imports and exports.

"September trade is characterized by weak demand for goods from China through Europe and North America," explained the head of the Kiel Trade Indicator, Vincent Stamer. This is particularly evident in the sharply declining freight rates for goods transport from China to North America and Europe. According to the information, these have been falling rapidly for around four months, on the route from China to the US west coast they are almost back to the pre-corona level, on the route from China to Western Europe not quite yet.

With the outbreak of the corona pandemic in 2020, supply and demand in the global movement of goods got mixed up - the availability of freight capacity fell, the demand for goods in particular and their transport from China rose. The result: Freight rates rose up to ten times the transport costs that had been common for many years.

"A slowdown in global trade could also represent something positive as stretched supply chains and traffic congestion recover from the respite," Stamer said. Because despite the high order backlog, delivery bottlenecks are still slowing down higher growth in price-adjusted exports from Germany. The values ​​are now negative for the third month in a row.

According to IfW observations, the most serious container ship jam is still in the North Sea and ties up more than two percent of global freight capacity. In the German Bight, on the other hand, the traffic jam has decreased – instead of 19, only 12 container ships are still waiting to be cleared in Hamburg or Bremerhaven.

German shipping companies have also benefited massively from the high freight rates in recent years, such as Hapag-Lloyd, which reported record profits. The company announced this week that it intends to invest in a South American company worth billions. Should the profit decrease due to falling freight rates, this would also affect the Hamburg state treasury. The city-state is a shareholder in Hapag-Lloyd and was recently able to look forward to the payment of a dividend of almost one billion euros.

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