Chapter3. Container shipping market outlook considering inflation

 At this point, most analysts are saying that sea freight rates (SCFI) will fall, but will not fall to pre-pandemic levels.

The question here is whether inflation, which can be easily seen in recent economic articles, is reflected. In the end, container shipping rates also reflect the inflation rate of exporters and consumers.

 Stock markets around the world are faltering after the release of the US Consumer Price Index (CPI). This is probably because it is leading the world and accounts for a large portion of retail demand in the US. Therefore, in this analysis, we will look at the US Consumer Price Index (CPI) as the standard. 

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1.     US Consumer Price Index (CPI) Status

 The figure below is the US Consumer Price Index (YoY) data.

 Prior to Covid-19, the average CPI was in the mid-1~2% range, but since May 21, shipping rates have risen sharply due to supply chain disruption, and the CPI has also exceeded 5%. continues to show In other words, it shows that this inflation rate has a very close relationship with sea freight rates.

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2.     SCFI taking inflation into account

 Covid-19 started at the end of 2019 and has impacted since 2020. Therefore, in this study, the adjusted SCFI was calculated by considering the CPI increase rate in the actual actual SCFI value from January 2020.

 The result is shown in the graph below.

According to this analysis, the lowest point is 854 and the highest point is 5,446. It goes without saying, but considering the inflation rate, it represents a higher level than the actual SCFI value.

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3.     Container Freight (SCFI) Outlook

(Ref. Where is the bottom of container freight rates? (2) (tistory.com))

Where is the bottom of container freight rates? (2)

 

 Looking at the previous article (Chapter 2), the scope of SCFI was projected based on demand.

Q1 in 2023: 2,108 to 2,195

Q2 in 2023: The range is projected from 1,896 to 1,947.

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 As of the current standard, the difference between Adjusted SCFI and Actual SCFI is about 160. The number 160 is the average of the difference between Adjusted and Actual SCFI from January 2020 to September 2022. In other words, let's calculate under the premise that the currently announced SCFI does not properly reflect the inflation rate.

If so, simply deduct about 160 points.

In conclusion,

Q1 in 2023: 1,948 to 2,035

Q2 2023: The range of 1,736 to 1,787 is expected to be the actual SCFI projection after adjusting for inflation.

 

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