SIMIC

Last week's Drewry's Container Forecaster said falling demand has driven container spot freight rates lower on a weekly basis over the last four months and high inflation is eroding confidence that volumes will stage much of a comeback.

"It certainly feels like we are at the beginning of the end of the container market bull run," said Drewry.

Although carriers have proven that they can deploy strategies to uphold profits despite lower volumes, as evident from first quarter results, container shipping stocks have certainly taken a hit.

Drewry's report notes that while the container market has definitely turned, the winding down of high rates and carrier profits will likely take some time - with no significant loosening likely until the second half of 2023.

It comes as no surprise that container freight rates had reached unsustainable levels, but timing the market's return to normal has remained uncertain amid ongoing issues in the supply chain.

Drewry's World Container Index shows rates declined three per cent last week to US$7,066 per FEU - 16 per cent lower than a year ago and down significantly from the September 2021's $10,377 peak, even though still about double the five-year average.

Port congestion, which has been a main driver sky-rocketing rates, remains to be an issue and Drewry says there are no signs yet that the port bottlenecks are going away. Take away port congestion, and the market would likely see a "very swift normalisation", said Drewry.