It's getting cheaper to ship

After soaring during the pandemic, the cost of shipping goods across the ocean is falling just as dramatically, down 60% from the beginning of the year, per The Wall Street Journal.

Why it matters: Cheaper shipping rates will ease some of the upward pressure on prices (good), but they also show that consumer demand is falling and the global economy is cooling (bad), which naturally sends off a warning light on our recession dashboard. 

Catch up: The cost to ship a 40-foot container from China to the US rose from US$1,400 in February 2020 to more than US$20,000 in September 2021. 

  • Demand fueled higher prices as people spent money they’d typically use for travel, restaurants, and other pandemic-unfriendly activities to buy more stuff instead.
  • Meanwhile, ports backed up, and supply chains broke down, forcing businesses to shell out big bucks to meet demand, especially for spending events like the holidays.

But those days are over as we return to pre-pandemic spending patterns (more services and experiences, fewer things) and trim non-essential purchases in the face of high prices.

  • That’s leading big retailers like Walmart and Target to cancel billions of dollars in orders, freeing up shipping space during (what is usually) a busy pre-holiday season.

Bottom line: With record-high gas prices, shipping rates likely won’t return to pre-pandemic levels, but if it becomes cheaper to move goods, it may eventually translate into lower prices.