Trade and Development Chart: Freight rates fall even as stress rises

Trade-policy uncertainty and conflict in the Middle East have contributed to elevated levels of stress in global supply chains over the past year. Surprisingly, though, container freight rates have been falling. What possibly accounts for the divergence? Two factors have likely exerted downward pressure on freight rates: The first is that shipping capacity has risen by 16 percent since 2024 as new vessels, ordered to alleviate pandemic-driven shortages, entered into service. The second is the increased competition on some routes resulting from a restructuring of liner shipping alliances. The decoupling between rates and stress is further evidence of GVCs’ resilience and adaptability to shocks.