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The Rise and Fall of Shipping Costs

| October 10, 2022
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Chart Content: Five-year snapshot of global shipping rates via container ships.

Chart Significance: The supply chain issues that emerged during the depths of the COVID pandemic resulted in shortages of goods and services in a way that was largely unforeseen. The impact was further exacerbated by a shortage of labor due to established safety protocols to prevent the spread of COVID. The demand backdrop for goods and services, however, only grew stronger, and the ensuing demand cycle added notable stress to supply chains and the infrastructure tied to the delivery of goods. As a result of the demand, costs [for shipping] skyrocketed.

Potential Forward-Looking Implications: If we were to blame the Federal Reserve as the catalyst for the current volatility cycle across capital markets, then perhaps we could do the same with consumers and their unwavering demand for overshooting capital markets in 2021. In other words, the notion for the need of normalization should come as no shock when considering that we’ve experienced extremes on both ends of the spectrum. The data in the chart below has sustained a trend that bares notable significance in achieving normalization, and we believe it provides actionable insight as to the potential path of inflationary pressures over the next six months.

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Investment advice offered through CX Institutional, a registered investment advisor.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in the presentation may not develop as predicted.

All data is sourced from Bloomberg, through the release of monthly figures from the U.S. Bureau of Labor Statistics or from the Federal Reserve and any of its affiliated regional locations.

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