Shipping rates tumble 50%, making tyre imports more competitive

Plummeting shipping rates mean prices of non-European imported tyres could drop. The Covid-19 pandemic led to unprecedented increases in shipping costs. Inevitably this has led to record profits at most of the major shipping firms, but now there are signs that the party is over. And if shipping costs have fallen, tyre imports into Europe are both more attractive and more competitive.

Shipping costs have fallen by 50 per cent in the last year, according to the Shanghai Containerized Freight Index, which tracks pricing across all the major shipping firms. That puts current rates above pre-pandemic levels, but markedly down on record highs. However, numerous other shipping metrics show even greater declines, down between 57 per cent and 76 per cent. And analysts report that the price spiral is sharper and less predictable than expected: “There is no clarity with respect to when or where market rates may bottom,” Stifel analyst Mark Nolan told investors.

Lower tyre prices make an enormous difference to tyre importers that have experienced a perfect storm of low availability, increased product costs (due to factors including Ukraine-war precipitated Carbon Black prices) and sky-high shipping costs.

One importer told Tyres & Accessories that their latest quote was less than half the price of a year ago and shared the following figures by way of illustration. At the peak of shipping costs, the international importer was charged up $21,000 per container of tyres, an eye-watering figure that subsequently dropped to $14,000 and then $8,000. There is even talk of pricing falling back to pre-pandemic levels in the order of the low single-digit thousands.

With Asian, and particularly Chinese, tyre makers not subject to the cost effects of the Russian-Ukraine war and with shipping prices going the way they have, not to mention the cost of living crisis being endured by end-consumers, importers look set to capitalise on the new-found competitiveness in the shipping world in a bid to tempt price-conscious customers.