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Freight Rates Set To Fall Significantly

Australian retailers, distributors and suppliers could be in for some good news with analysts tipping that freight costs are set to fall after two years of soaring cost rises.

In just three years, the container shipping industry will have made as much money as the entire previous six decades with local suppliers witnessing freight costs that have been seen before,

A basic container that cost $3,000 prior to COVID was suddenly $13,000 resulting in significant price rises across multiple categories.

The Financial Times claims that soaring demand following the pandemic, saw shipping groups achieve a level of profitability that few in the notoriously volatile sector could have dreamt of.

Container shipping groups from Mediterranean Shipping Company and AP Møller Maersk to CMA CGM and Hapag-Lloyd have experienced a “once in a lifetime” market boom.

“Earning the money, they have done in the past two years is intoxicating,” said Simon Heaney, a senior manager at Drewry, the shipping research group.

Drewry forecasts the industry’s profits for 2021-23 will equal the amount it made between the 1950s, when container ships were first built, and 2020.

They now claim that the container shipping cycle appears to have peaked and that prices are set to fall.

During the past three months freight rates have fallen by about a third and profitability is set to decline next year, analysts claim.

This should result in a fall in inflation across CE and appliance categories.

Drewry estimates that the entire industry made an operating profit of just $7bn in 2019, and $26bn in 2020. But in 2021, as companies paid ever higher rates to get the goods they needed, operating profits jumped to $210bn and are forecast to reach $270bn this year.



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