The Cost Of Transport Begins To Slow Down After Reaching 2008 Highs

Sometimes the market sins and forgets to comply with the first commandment dictated by its law, which corresponds to the supply, demand and price of goods and services. In a perfect market, a higher demand increases the price until it is balanced. However, with raw materials and their transportation this is not happening.

So far this year, the price of raw materials, measured through the Bloomberg Commodity Index , has increased by 33% and has reached highs not seen since 2015. This should translate to fewer purchases of materials internationally and , consequently, to a drop in freight prices.

However, the opposite has happened. The Baltic Dry Index measures the average cost per tonne at which ship owners charter their vessels on a daily basis, through which 95% of the global freight transport of solid raw materials is carried out, and therefore also serves as an indicator advance of economic activity.

Since the first of January, this indicator of international trade accumulates an advance of almost 250% after going from 1,357 points to more than 4,750 points at which it is currently listed. And that has slightly deflated in the last two weeks, in which it adds a drop of just over 15%.

Juan Ignacio Crespo , advisor to the global multi-cycle fund of Renta 4, explains that “this indicates that the transport of solid raw materials [grains, iron ore … etc.] has become very expensive in the last 14 months and its behavior is far from that of 2018 “.

“All this reflects this uncontrolled increase in demand together with the problems of dislocation of the distribution networks caused by the pandemic,” adds the expert. “The lack of products and components not only affects the microchips but also everyday products such as kitchen chairs or breakfast cups, as companies like Ikea point out,” argues Crespo.

Maersk itself, which is one of the largest shipping companies in the world , warns that the only solution to these supply problems is precisely to moderate consumption. “We have to figure out how to break this vicious circle,” said the director of a subsidiary of the group in an interview with the Financial Times.

Crespo warns that “economic expansion threatens to eat itself up.” “The recent bad behavior of private consumption in the United States may alleviate the situation somewhat, and more so considering that the checks for $ 300 a week that 7.5 million Americans were receiving have run out, although the Fed and the Treasury will see each other. tempted to encourage consumption with new measures and stimuli, which would worsen the situation of the supply chain, “he concludes.

The container becomes more expensive
Container shipping has also risen a lot , as measured by the Harpex index, which has appreciated 800% since June last year.

Another way to measure the same is through the prices paid per container between the main routes in the world using the Shanghai Shipping Exchange Containerized Freight Index , which includes the 15 largest global routes with the port of Shanghai. These ports include Hamburg, Rotterdam, Barcelona, ​​Genoa, Los Angeles, New York and Osaka, among others. This index, which averages all these journeys, accumulates an increase of 65% so far this year and is listed in the area of ​​all-time highs (it has been calculated since 2011).