With prices skyrocketing across the board, who doesn’t want to see a dip in costs? Luckily, it looks like ocean freight rates might start to decline in the early part of 2023. Without a doubt, demand for shipping space has reached an all-time high but at this time, consumer demand has started to subside which means that a form of ‘catch up’ can occur.
The Journal of Commerce recently took a hard look at the supply chain and focused on ocean freight shipping coupled with consumer demand.
The main points examined were as follows:
Major imports are once again experiencing an increase in freight costs. Sadly, they will pass on those costs to consumers. This means there is going to be a fresh wave of inflation that might sweep the nation and consumers will bear the brunt of the increase.
Importers have started to increase their stockpile of inventory at a greater rate than they should. The increase in inventories is leading to places like Walmart and Target providing some markdowns in an effort to unload the inventory.
The level of inventory has increased by 15% since last year in April. The risk of loss of sale has increased so retailers will order more.
The demand for shipping space will continue to stay high. However, it should be noted that it is not a reflection of consumer demand. Things have to start catching up and forecasts see that occurring at the beginning portion of 2021.
At the start of 2023, eastbound ocean freight rates are projected to start to decline sharply.
Many foresee that the backlash against carriers is going to become extreme because everyone sees the money they are making. In an effort to control prices, legislation is going to start taking place.
There is more than likely going to be a hard pullback from consumers in 2023.
Tariffs are going to be removed but probably won’t bring down prices.
It should be noted that the consumer is who ultimately calls the shots. As long as consumers are willing to pay the price then the important will continue to increase the prices. However if the market demand plummets then the price is going to lower.
If you would like to learn more about ocean freight, contact Sorbel Network Shipping Co.
