Freight Costs Fueled Inflation. Can They Dampen It Now?
A steep decline in shipping rates should restrain the acceleration in prices.
The price to ship a maritime container has plunged.
Photographer: Tim Rue/Bloomberg
Companies are mentioning freight costs much less frequently during this season of conference calls than they did a year ago, and when they have discussed them, the conversation has revolved around a sense of relief. That’s a good sign for easing inflation.
It’s easy to see why. The price to ship a maritime container on the benchmark Shanghai-to-Los Angeles route has plummeted to $4,252 from a record $12,424 almost exactly a year ago, according to Drewry Shipping Consultants. Spot trucking rates not including fuel surcharges have dropped 30% so far in the third third quarter from the period a year earlier, according the KeyBanc Capital Markets. Transportation companies add surcharges to cover fuel cost increases, which means the freight bill to shippers is falling along with lower diesel prices. US on-highway diesel prices dropped to $4.96 a gallon on Sept. 19 from a record $5.78 on June 27, according to weekly data from the Energy Information Administration.