Finshots Daily The cost of global trade
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Mar 8, 2026 They explain how cheap shipping once erased distance and why rising freight is changing that story. A 650% jump in LNG carrier rates and tight fleets are shown as drivers of higher energy import costs. Shipping volatility, container index spikes, and ships used as floating storage are explored. The discussion considers how higher freight could shift production closer to markets and what India needs to gain from that.
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How Cheap Shipping Shrunk The World
- Cheap and reliable shipping made distance almost irrelevant and enabled globalization to move most trade by sea.
- Over 80% of global trade now moves by sea via container ships, bulk carriers, tankers and specialised vessels like LNG carriers, which depended on low freight costs.
Shipping Prices Surge During Crises Not Booms
- Shipping markets are highly unstable and prices spike during crises rather than economic booms.
- The SCFI spiked during 2020–22 with COVID and the Russia-Ukraine war, then cooled in 2022–23 when disruptions eased.
Why LNG Freight Can Jump 650 Percent Fast
- LNG shipping is unusually tight with only ~820 specialised carriers, so small disruptions can push freight rates sharply higher.
- Last week rates jumped over 650% to about $300,000/day because carriers were tied up amid Middle East tensions.