by Professor Ross Kingwell, AEGIC Chief Economist
After two years of unprecedented high rates for shipping containers, rates have finally strongly trended downwards throughout the latter half of 2022.
When AEGIC investigated and then reported in August 2022 on the opportunities to improve Australia’s exports of containerised grain and fodder; shipping rates for containers were still stubbornly high. AEGIC’s investigations and interactions with industry stakeholders had revealed a raft of problems. Many issues and difficulties plagued containerised grain and fodder export businesses.
A key problem was the huge escalation in the cost of shipping containerised grain and fodder to international customers that occurred in 2020/21. Many export businesses were greatly affected, especially when the rates remained at unprecedented high levels throughout 2021/22 (Figure 1).
Many analysts were unsure about how long the high rates would last for. Even when the rates began to fall consistently during mid-2022, analysts remained unsure about how quickly the rates would fall. Although analysts could not predict when the rates would bottom out, the common agreement was that the rates would settle at price points above the low levels experienced in the years before the disruption of COVID. In the second half of 2022, the rates have continued to sharply decline and are now close to levels last seen in late 2020 (Figure 1).
The rapid decline in shipping rates for containerised goods in the latter half of 2022 is helping make Australian containerised grain and fodder more affordable to international customers.
Noting that the war in Ukraine has already disrupted international supplies of grain and forced grain prices to be higher, the lowering of shipping rates for containerised grains and fodder is especially welcomed by price-sensitive buyers.
Expert grains industry analysis and commentary from AEGIC’s Economics and Market Insight Team on a range of big-picture topics that affect Australia’s export grains sector.