After two years of talking about a crisis in the supply chains, the data points for the first time to a stabilization, at least as far as prices are concerned. In Shanghai – the world’s largest container port – prices fell 20% in the last quarter, and the trend points downward after reaching record prices.
But as fuel prices remain under pressure and the threat of a recession increases, talk of cost normalization is less likely.
For importers and exporters it has been a rough couple of years, to say the least. Shipping prices soared as a result of port congestion and container shortages, reaching all-time highs.
An example of this was seen in the trade of 20-foot containers (also known as TEUs) between Shanghai and Rotterdam, which in 2019 had an average cost of 1,543 dollars, and which by 2021 already exceeded 11,300 dollars, according to the World Container Index (WCI), prepared by the firm Drewry Supply Chain Advisors.
A similar trend was seen from the Chinese port to other destinations such as Los Angeles and New York, and was eventually one of the factors that led to the spike in inflation around the world, along with the rise in fuel prices caused by the conflict. between Russia and Ukraine.
However, in recent weeks this has changed. Container shipping between Shanghai and Los Angeles fell 20%, a trend that continues with other destinations such as Rotterdam.
For Mexican importers, this effect is beginning to be seen collaterally. In the main ports of the country, such as Manzanillo –the largest container gateway in Mexico– and Lázaro Cárdenas –key for the automotive trade– the decrease in costs is beginning to be seen as a result of the global trend, but also of efforts at the international level. local.
“There is a decrease in maritime freight costs, they have been going down little by little (…) It has gone down because the port operation in the United States and Mexico has been better managed, with fewer days spent in the ports, which has allowed freight costs are reduced”, explains Fernando Ruíz, general director of the Mexican Business Council for Foreign Trade, Investment and Technology (Comce).
According to Comce, waiting times have been reduced from a threshold of 15 days waiting in Mexican ports to a range of nine to 10 days. However, the ideal would be to reduce this period to an average of three to four days.
The decrease has been achieved even in the face of the 12.6% increase in the number of containers operated in Manzanillo between January and May 2022 compared to the same period in 2019, despite a saturation of the facility that preceded the pandemic. In the case of Lázaro Cárdenas, the increase was 54.3% in the same period, according to data from the General Coordination of Ports and Merchant Marine.
“High demand in Mexico continues and sufficient advance notice of bookings should be given,” DHL Global Forwarding said in a July 1 report, which recommended requesting transportation services six to seven weeks in advance. “We see some stabilization of rates with all operators, which will last until the third quarter.”
However, the challenge ahead in the medium term is a likely economic recession, which “would be difficult to avoid” for several countries, the World Bank said in an analysis last June. For maritime trade with Mexico, this would translate into a decrease in volumes, although everything will depend on the performance of the United States, which concentrates around 80% of exports.
“If there is no recession in the United States, nor in the Canadian market, that is good news for Mexico. Where it is more likely to exist is in Europe, as well as less growth in Asia. But everything will depend on that”, Ruíz concluded.
