High ocean freight rates were expected to return to pre-pandemic normality, and with a significant drop in rates heading into 2022, it was predicted that rates could continue to decline throughout the year. Alas, the first quarter of the year has at least delayed these hopes for now.
Volume, despite already being at high levels, has continued to increase overall in Q1-22, especially on the US West Coast (USWC). In Oakland the volume grew 13,2% compared to the previous quarter, and in Los Angeles and Long Beach 7,3% and 7,5% respectively.
This continues to cause port congestion, a major factor contributing to keeping rates high in 1Q-22. Statista data shows that, on average, 11,1% of global shipping capacity was lost to congestion in 2021, up from 2,3% in 2019. This continues to rise in Q1-22, with the congestion causing the loss of 12,7% of global capacity on average in January.
There are signs that the conditions are being created for rates to start falling. While the lockdowns in China may themselves cause disruption, this may begin to provide limited but much-needed relief from the congested ports of the USWC and also the now increasingly congested USEC.