CARGOCONNECT-MAY23 - Flipbook - Page 50
FEATURE : OCEAN FREIGHT RATES
With the competitive dynamics in
the container shipping and liner
industry, I especially don’t expect
the big players to hold back, and
we do expect prices to come down
to almost variable costs.
CHRISTIAN ROELOFFS, CO-FOUNDER
AND CEO, CONTAINER XCHANGE
It is only a matter of time before
the inflated rates fall back to the
historically stable US$2,000 level.
My best guess is that transatlantic
rates will normalise within the
next six months.
PETER SAND, CHIEF ANALYST, XENETA
Spot rates between Asia to North
Europe are down 13 per cent
compared to the end of December
2022 – which is quite different
from the Asia to Mediterranean
market which in the same period
is down 22 per cent.
LARS JENSEN, CEO AND PARTNER, SEA
INTELLIGENCE CONSULTING
Once all the COVID-19 induced
disturbances settle down, we
expect the overall freight rates to
settle and sustain close to the
2019 pre-pandemic rates.
DR ADITYA GUPTA, COO– SUPPLY CHAIN
MANAGEMENT CENTRE, IIM BANGALORE
50 | CARGOCONNECT MAY 2023
orders, while working through a backlog of inventory.
As a result, the cargo volumes are weak and ocean
carriers are scrambling to fill space on ships.
Carriers such as MSC and AP Moller - Maersk
are trying to uplift the prices by cancelling voyages,
which could result in a new round of cargo delays,
as containers get bumped from one ship to the next.
But, despite the potential delays and volatile
freight shipping costs, there are a few steps that
importers can launch into right now to navigate the
current freight market.
* Compare at least a few quotes and modes to
make sure one is getting the best cost and the
most efficient service possible.
* Buffer one’s freight budget and the transit time
for changes. Costs due to unforeseen delays
or limited capacity can arise, so one should be
adequately prepared.
* Explore warehousing options to mitigate the effects
of lowered demand and business restrictions in
the US.
* Pay attention to the profitability of one’s goods
and consider if a pivot could be worthwhile.
Additionally, one must remember to factor in
the freight costs when assessing profitability.
* A better alignment of ocean shipping operations
and inland flow planning with genesis/origin in
Asia—now called “origin management”, should
once again become possible, now that ocean
shipping is becoming more reliable.
With a significant oversupply of containers and
a further influx of more TEUs in 2023, Container
xChange expects shipping lines to continue to
reduce vessel capacity and suspend services, by
introducing considerable blank sailings. Maersk,
for one, has already informed that it will continue
to make capacity adjustments towards services,
ranging from Asia to North America, Europe and
the Mediterranean, in order to better align with
the demand fluctuations.
With respect to addressing the demand reduction,
ocean carriers commonly return to blank sails to
reduce the available capacity on ships. In addition to
blank sailings, ocean carriers have looked at reducing
the delivery speed by using slower sailings.
Effectively the question is whether importers
are still wary of supply chain disruptions that will
influence them to buy early or will they return to
‘just-in-time' model. Many companies, particularly
small and medium-sized enterprises, are evaluating
their current supply chain strategies and evaluating
which models can reduce risk in the entirety.
Experts anticipate more efforts toward diversification of supply chain sourcing and manufacturing
away from home, many see this as a long-term view
that requires vision and strategy from companies,
looking out for a more resilient supply chain. As
such, Roeloffs expects more increased container
volumes intra-Asia, and more countries will emerge
as potential alternatives like Vietnam and India.