Rising freight rates are by no means a new annoyance to the industry. The increases and decreases in ocean rates have frustrated many freight forwarders for years, however, is there a risk that due to capacity surges and an expectation on carriers to deliver efficiently, both in terms of speed and cost, ocean freight is going to become unstainable, loathed form of distribution for many freight forwarders? Let’s see.
Recently analyst Jefferies has anticipated an ‘inflection point’ from the second half (H2) of 2018 in which capacity growth slows to 4% later this year, 3% next year, and 2% in 2020 − “likely leading to higher freight rates”. Whilst this may affect more than ocean freight as a distribution network, many people within the freight forwarding commerce will collectively sighing, with the realisation in the coming weeks the rates they may have come accustom too over the last while are going to change yet again.
The nature of competitive freight forwarding, along with the variations and rate revisions per year, not to mention what things like ‘trade wars’ will do, means there will continually be drops, rises and quiet periods for shippers, however, many freight forwarders have pointed towards a more sustainable, equal way of approaching the tricky subject of freight rates for ocean distribution.
Ocean freight makes up a substantial economic chunk of many regions and markets throughout the world, and whilst the environmental implications of the distribution method need a thorough plan, rates need to be strategically examined, to make them equally as sustainable handlers. Whilst I wish I could provide a God like piece of rhetoric to the conundrum of ocean of volatility, sadly I have neither the time, resources or required brain power.
There are, however, ways you can get the best rate for the meantime. Understanding carrier lanes and liability, researching national and regional carriers, minimising empty space, stacking your cargo, considering spot pricing, utilising new automation technologies and reading through the complicated carrier rules tariffs as they apply to price. Whilst doing these aren’t guaranteed to make your ocean freight rate experience drastically decrease, it may just help to you securing new contracts with that slightly lower rate. These tips, perhaps, are one way to take the frustration out of ocean volatility.
Matt Dailly | Editor | FORWARDER Magazine