In the introduction, we examine the decline in economic growth of the third largest economy in the world to understand the effects of the decline in economic growth on sea freight costs.
Bloomberg economists forecast that Japan’s economic recovery will slow amid growing concerns about a simultaneous slowdown in global growth.
According to the forecast of economists in the July 1st to 6th survey, the world’s third largest economy is expected to have an annual growth of 3.4% in the quarter to June compared to the previous period; This figure is lower than the four percent growth expected in the previous survey.
It is predicted that with a one percent increase observed in the second quarter of 2023, the improvement process will continue slowly from there.
The weaker outlook for Japan’s economy reflects worries abroad, fueled by rising expectations of a possible US recession.
A further slowdown in Japan may mean Prime Minister Fumio Kishida needs to speed up any plans to provide more support for consumers and businesses.
Meanwhile, inflation continues and consumer prices excluding fresh food are expected to remain at or above the central bank’s two percent target in the first quarter of next year.
The economy slowed down in the first quarter of this year mainly due to the Covid-19 restrictions on jobs. Consumption is expected to bounce back in the second quarter, while rising inflation at home and an anticipated slowdown in Japan’s key trading partners pose a barrier to accelerating the recovery.
Investigating factors affecting sea transportation and analyzing the effect of economic growth reduction on sea transportation costs
Important factors such as general economic conditions affect sea freight rates. The shock caused by Corona showed how important the shipping rate is to the global economy. The coronavirus has affected shipping. Ports lacked manpower.
Truck drivers and ship crews could not cross borders due to public health restrictions. The drop in demand in maritime transport caused by prolonged quarantines has affected the capacity of supply chains. In addition to the delay in delivering the goods to the customers, the cost of transporting sea freight with ships to the destination increased.
Inflation is one of the economic dimensions that directly and indirectly affects the cost of transporting cargo by ship. Inflation caused by fuel or food prices affects shipping costs. It can be concluded like this; The contribution of inflation to changes in shipping rates is similar to the effects of economic shocks to global oil and food prices.
The increase in shipping costs in some countries is more dependent on inflation than others. Research shows that the structural characteristics of an economy affect the cost of sea transportation.
In fact, people from importing countries, landlocked and low-income countries with weaker economic structures pay higher shipping rates.
Last week, the sea freight index continued its downward trend. So that with a seven percent drop, it reached three thousand one hundred and forty-five dollars per forty-foot container. This figure is the lowest in the last twenty-three months and compared to the peak period of Corona, it has recorded a seventy percent drop.
The amount of this decrease for the route from China to Europe was thirteen percent on a weekly scale, which is the highest amount of decrease.
Reducing sea transportation costs can be good news for the country’s exporters and increases competitiveness in this field.
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