Let’s talk about shipping!
The World Container Index from Shanghai to LA shows the shipping rate of a 40-foot box.
As you would expect, costs rose dramatically during and immediately following the COVID-19 crisis as ports, transportation, warehousing, etc. all helped fuel supply chain issues. Rates peaked in October 2021 and have consistently fallen since then, which is consistent with other data showing supply chain pressures have eased.
The reason this chart is important right now is the past week was the largest weekly decline in the history of the index. Reasons for this include lower US demand for Chinese made goods, lower production in China, and less overall spending by US consumers. This is potentially good news for inflation but may also signal trouble for the global economy, including the US.
Source: Helios Quantitative Research, Bloomberg