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Market Minute: World shipping costs continue to drop

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The number of container ships sailing from China to the United States dropped considerably in October.

Not only is the decline a reflection of the impact of ever-changing import duties but it’s also a sign that American businesses are working off inventories built up as China has expanded its exports.

California seaports are quieter …

The record number of import containers processed at the Los Angeles-area seaports in July has been followed by a three-month decline as the ebb and flow of shipping continues to follow ever-changing tariff duties imposed on inbound U.S. imports.

…affecting demand for trucks…

The drop in imports implies a decrease in demand for trucking those containers as well as the revenue of businesses that support the truckers.

… and pushing down costs

The average cost of shipping a container from Shanghai to Los Angeles dropped from $5,900 to $2,450 in the last four months. This is a 60% decline compared with the same months of last year.

It’s the same in other countries.

We consider the global drop in shipping costs to be a product of:

  • The end of the inventory buildup,
  • Businesses and consumers preparing for a global economic slowdown.
  • The reordering of global supply chains.

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About Joseph Brusuelas

@JoeBrusuelas

Joe Brusuelas, “chief economist to the middle market,” is the preeminent voice championing issues and policies facing midsize companies in the United States and around the world. An award-winning economist, Brusuelas has more than 20 years’ experience analyzing U.S. monetary policy, labor markets, fiscal policy, international finance, economic indicators and the condition of the U.S. consumer.

A member of the Wall Street Journal’s forecasting panel and the UCLA Anderson School of Management's Board of Directors, Brusuelas regularly briefs members of Congress and other senior officials regarding the impacts of federal policy on the middle market and the factors by which middle market executives make business decisions. He also frequently offers his insights on the U.S., Canadian and global economies in the financial media. In 2020, he was named one of the 100 most influential economists by Richtopia. In December 2023, Brusuelas and the economics team were recognized on Bloomberg's list of Best Bond Forecasters after correctly predicting where the benchmark Treasury would end the year.

Before joining RSM in 2014, Brusuelas spent four years as a senior economist at Bloomberg L.P. and the Bloomberg Briefs newsletter group, where he co-founded the award-winning Bloomberg Economic Brief. Earlier in his career, he was a director at Moody's Analytics covering the U.S. and global economies for the Dismal Scientist website. He also served as chief economist at Merk Investments L.L.C. and chief U.S. economist at IDEAglobal.

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