Pressures on the global supply chain have shown signs of easing, a trend that should translate into less pressure on commodity prices in the months ahead.
Compared to before the pandemic, ports and warehouses are still congested, and businesses are still struggling with shipping rates and delivery times that remain well above normal. Still, this smoother supply chain is likely to provide a source of relief for an economy that is still struggling with rapid inflation. High demand as well as ongoing shortages and delays in delivery of some products have helped push up prices for cars, toys, furniture, food and other goods.
Inflation data released Wednesday morning showed that prices for some goods were beginning to cool. The cost of clothing fell 0.1% from the previous month, with prices for men’s shoes, women’s coats and baby clothes all falling. The price of major appliances fell 2.2%, while jewelry fell 1.2%.
Other goods, such as women’s dresses, living room furniture and paper household goods, saw their prices continue to rise.
“It’s a huge traffic jam that’s being unblocked,” said Phil Levy, chief economist at freight forwarder Flexport.
The cost of transporting goods has fallen in recent months from the stratospheric highs of last year. For example, importers are currently paying around $6,632 in the spot market to move a 40ft container from China to the US West Coast, up from $18,346 this time last year (but still significantly more than the $2,900 two years ago), according to data from the Freightos group. Average delivery times on the same route are currently around 74 days, down from a peak of 99 days in January.
A Global Supply Chain Pressures Index created by the Federal Reserve Bank of New York also shows that pressures have been trending lower since December.
While shipping rates are still high and ports are still busy, “generally speaking, it’s clear we’re on a normalization vector,” said Eytan Buchman, chief marketing officer at Freightos.