Container freight rates are rising, and it currently costs $9,000 to transport a 40-foot container from Shanghai to New York. At the peak of Covid, the cost was $16,000, see the first chart below.
The sources for the rise in transportation costs are Suez crossings significantly below normal levels, disruptions at some Asian ports, and growth in demand due to restocking.
The rise in transportation costs is very specific to containers. Freight rates by truck, rail, and air have generally not increased by the same magnitude. Only the Baltic Capesize Index is trending significantly higher.
Most importantly, if the global economy was slowing down rapidly, then all transportation costs would be falling. That is not what we are seeing, which suggests that global growth continues to be fine.
Source: WCI, Bloomberg, Apollo Chief EconomistSource: Portwatch, The IMF, Apollo Chief EconomistSource: Bloomberg, Apollo Chief EconomistSource: Bloomberg, Apollo Chief EconomistSource: Bloomberg, Apollo Chief Economist (Note: Market demand index is the ratio of loads over trucks and measures the relative truck demand; Van rates are measured in USD)Source: Bloomberg, Apollo Chief EconomistSource: Bloomberg, Apollo Chief Economist
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