Shipping Rates Dropping

“Much reduced port congestion level, along with weaker cargo arrivals, was one of the major reasons behind significant decrease in freight rates,” S&P said in a note on Wednesday. 

“Based on expectation of weaker trade volume, we do not expect extremely high congestion again in the coming quarters.”

Freight rates for containers and dry bulkers — or vessels carrying raw materials and bulk goods — have fallen over the past three months, S&P said, adding that rates peaked earlier than expected in the second quarter.

“Due to the seasonality of the market, dry bulk freight rates would typically peak in the third quarter; however, according to S&P Global Market Intelligence’s latest dry bulk freight market outlook, the second quarter would likely be the peak of 2022,” the firm said. 

The firm’s Freight Rate Forecast models have also predicted the Baltic Dry Index — a barometer for the price of moving major raw materials by sea — is expected to fall about 20% to 30% for the year before recovering slightly in 2024.