Shipping rates are still falling, in another sign that a global recession may be coming

The latest data from S&P Global Market Intelligence shows that freight rates have fallen as global trade volumes have slowed.

While freight rates have fallen due to the easing of supply chain disruptions, a lot of the slowdown in container and vessel demand was due to weaker cargo movement.

S&P said in a note on Wednesday that the decrease in freight rates was due to reduced port congestion and weaker cargo arrivals.

We don't expect high congestion again in the coming quarters based on expectation of weaker trade volume.

Aerial photo taken on Aug 7, 2022 shows the loading and unloading of import and export goods at the container terminal of Lianyungang Port in East China’s Jiangsu Province. China’s exports grew 7.1% in August year-on-year, while imports rose only 0.3%, both missing expectations, customs data showed on Wednesday.

According to S&P, freight rates for containers and dry bulkers have fallen over the past three months.

The second quarter would likely be the peak of the dry bulk freight market in 2022, according to the firm.

The Baltic Dry Index is expected to fall about 20% to 30% for the year before recovering slightly in 2024, according to the models of the firm.

The risks of a global recession are increasing as consumer demand retreats due to rising cost of living.

The World Trade Organization's Goods Trade Barometer, a benchmark which provides real-time information on the trajectory of merchandise trade, shows that global trade growth is stagnant.

The volume of world merchandise trade has stopped. The yearonyear growth for the first quarter of the year was 3.2%, down from 5.7% in the last quarter of the year.

The conflict in Ukranian is one of the reasons for the slow down.

The WTO had predicted that global trade would increase this year, but uncertainty has increased due to the ongoing conflict in Ukraine, rising inflationary pressures, and expected monetary policy tightening in advanced economies.

S&P Global Market Intelligence said that they were concerned.

Although we expect some seasonal improvements in the dry bulk market in coming months, volatile path to lower rates is expected in the near term due to slower-than- expected economic growth with continued weakness in mainland China's real estate sector.

Dry bulker freight rates could be lifted by any changes in China's Covid-zero policy or ceasefire agreements in the Russia-Ukraine war, but any further slowing in the demand for goods and consumption would push rates lower.

According to the Federal Reserve Bank of New York, global supply chain pressures are still at historically high levels, but they are easing.