It’s going to take between 18 and 30 months for freight rates to normalize according to Sea- Intelligence in its analysis of the trends in the China Containerized Freight Index (CCFI), the weekly ocean freight rate index for container shipments from major Chinese ports.
The consultancy firm examines the pre-pandemic period and identifies five prolonged periods of rate declines (in red) and increases (in green), noting that in the five decline periods, the average weekly drop ranged from -0.4 to – 0.9%.
Assuming that a normal freight rate level is around the 1000 index mark, this represents a 69% drop from current freight rates. Sea-Intelligence notes that during the 2008-2009 financial crisis, rates fell much faster than a weekly decline of 0.9%. Applying this rate to the current freight rate level it could take 18 months to return to normality.
If, on the other hand, the decline rate were to correspond to the average recorded over the five periods of decline in freight rates (-0.6% per week), normalization would take up to 26 months. However, as the current increase in freight rates is much higher than before, it would take 30 months to return to a normal freight rate.
Translation by Giles Foster