The cost of gas, groceries and just about everything else is rising, but container shipping rates have started to drop, The Wall Street Journal (WSJ) reported on Friday (April 15).
Data from the World Container Index (WCI), an independent data resource on the container market, revealed that Americans and other consumers in the developed world could spend less on goods.
Reasons include the disappearance of stimulus funds; inflation at its highest level in 40 years, eroding wage gains; and the Federal Reserve Board’s aggressive rate hikes.
Another factor could be the COVID-19 lockdown in Shanghai, which is disrupting the flow of goods from China and reducing the need for container shipping.
The WCI has slipped 16% since January. Major routes from Shanghai to Los Angeles and Shanghai to New York fell 17% and 16%, respectively.
But the most dramatic statistic is that the WCI is down 13% since March 10. This suggests that spring retail sales will suffer or that the pandemic outbreak in China will have a greater impact on global supply chains than many had expected.
George Griffiths, editor-in-chief of Global Container Freight Markets at S&P Global Commodity Insights, told the outlet that there is evidence that shipping companies are still running ships, but they are not loading or unloading containers in the ports.
The WCI is higher than it was before the pandemic hit more than two years ago. Still, the track should continue to drop.
This week, data from PYMNTS revealed that consumers are buying less and spending more. The report found that consumers spent more on groceries and retail items in March, and retail spending hit an all-time high.
Read more: New data shows consumers are buying less, spending more and changing their habits
This could spell trouble for retailers if inflation continues and consumer spending trends decline. The dollar has less purchasing power and many consumers limit their spending. Inflation has had a significant impact on Americans’ spending across all channels and categories.