The Drewry's World Container Index (WCI) effectively dipped for the 200th day to end below US$5,000 at US$4.942, just a percent away from 4,900 which is a 61.8% Fibonacci retracement level. It must be noted that the index has been falling ever since 24 February 2022.
Ironically, the index hit its peak around the same time, last year. The past few weeks have seen intensity of strikes increasing in supply chain hubs and zones across the globe.
However, there seems to have been a resolution with the US Railroad workers. While Consumer Confidence still prevails in the United States, it has definitely decreased over the past few months and the US inflation story isn't telling a different picture either.
Rates from Shanghai to Europe & US have fallen by double-digit percentage terms, yet again. The rates from Shanghai to Los Angeles in the US West Coast have depreciated two-thirds of their gains from the peak. Rates from China have dipped, a minimum of over 40% across the trade lanes to Europe & US.
Analysts are expecting a harsher slowdown of growth in China. The export growth has started slowing down too. While pre-pandemic spot rates are quite out of reach, the dip is being used to negotiate contract rates for newer contracts starting in 2023-24.
Author: Gautham Krishnan is a logistics professional with Fluor Corporation, in the area of project logistics and analytics, and has worked in the areas of Project Management, Business Development and Government Consulting.
