DP World expects freight rates to drop by a further 15% to 20% in 2023 as demand slows, the Dubai-based global logistics company's deputy chief executive and chief financial officer Yuvraj Narayan told Reuters on Monday.
Narayan said the first signs of a significant drop in demand were visible and freight rates on the shipping side had declined quite significantly on certain routes as agencies including the International Monetary Fund (IMF) lowered growth forecasts.
Freight rates are the prices at which cargoes are delivered by container from one point of the globe to another.
The biggest problems were in China, Europe and the United States, as the world's largest producing and consuming countries, DP World's Narayan said in an interview on the sidelines of the World Economic Forum (WEF) in Davos.
Narayan said that across shipping freight rates there had been a significant decline in freight rates of anywhere between 20% and 50% from their peaks last year.
There were three overriding factors driving this, Narayan said, notably disruptions during the COVID-19 pandemic, inflation in Europe due to the energy price spike and severe disruptions to global supply chains.
These disruptions were persisting as a result of the war in Ukraine and sanctions against Russia, he added.
DP World, which is a major ports operator, has been talking to the United Nations and Kyiv about providing safe passage for the transportation of grain out of Ukraine, but had yet to get the necessary approvals, Narayan added.
(Reuters - Reporting by Maha El Dahan; Editing by Alexander Smith)