Shipping Costs Suggest Smooth Sailing

Chart of the Week: Shipping Costs Suggest Smooth Sailing

Shipping costs are coming down. China’s zero-COVID-19 policy and resulting protests have analysts worried that exports will be disrupted once more. There are also concerns that a strike could disrupt rail traffic across the U.S. if the White House and Congress fail to enact emergency legislation preventing a widespread walkout.  

But what’s not getting nearly as much airtime is how much things have improved since the start of the year. One way to view this is by measuring traffic at the Los Angeles port. At the start of the year, more than 100 ships were backed up at sea waiting for a berth to unload. Today there are zero.

number of ships waiting to dock at ports decline
Note: Chart shows the number of ships waiting to dock at the ports of Los Angeles and Long Beach in California. October data as of 10/21/22; November data as of 11/22/22. Sources: Marine Exchange of Southern California, The Wall Street Journal.

And shipping costs are coming down as the backlog clears. The Shanghai Containerized Freight Index, a gauge of shipping prices out of China, is at one-third its June level. The average price for shipping a 40-foot container fell to its lowest level in two years earlier this month.

Backlog cleared. Supply chain becoming unkinked. Shipping costs down. That translates into lower inflation—and should continue in the months and quarters ahead. Of course, you won’t see that in the headlines…because bad news sells.

This material is distributed for informational purposes only. The ideas and opinions contained herein  should not be viewed as recommendations or personal investment advice. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

Our statements and opinions are subject to change without notice. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged.

Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional, or licensed insurance professional regarding your specific legal or tax situation, or insurance needs.

For a summary of Adviser Investments’ advisory services and fiduciary responsibilities to our clients, please review our Form CRS here.

© 2022 Adviser Investments, LLC. All Rights Reserved.