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The international freight market is struggling to recover from the chaos of the pandemic with volatility in pricing and available capacity continuing to cause headaches in the shipping sector. As with any crisis of this magnitude there are winners and losers.
In an uncertain and changeable climate, carriers seek stability. Shippers who can commit and provide some semblance of certainty to freight operators are seeing favorable pricing. The expectation on the side of the carriers being that their reliability and competitiveness in pricing will lead to stickier long-term relationships. Naturally this favors the larger, established players. They can guarantee higher volumes of freight (+10k TEU/year), more consistently and over the long term. As in any ambiguous situation, certainty carries a premium of its own. Concentrating and simplifying logistical demands, i.e. focused volume from a few key points of origin and nominate fewer key Non-Vessel Operating Common Carriers (NVOCCs), and the situation then becomes considerably more manageable.
On the flip-side, the shippers experiencing greater hardship tend to be those who’ve looked for efficiency over resilience. Those that have worked with shorter-term commitments in a bid to negotiate more competitive pricing in less chaotic times are now being priced out of the market. Having spread themselves thinly over both Beneficial Cargo Owners (BCOs) and NVOCCs, they lack the critical mass needed for the necessary negotiating muscle. These positions may be further weakened by a highly diverse shipping profile, i.e. low volume from multiple points of origin and unattractive annual volumes (
As this recent Freightwaves article reports, we’re seeing a continued disruption of the market. Pricing, and availability of operational capacity at origin and destinations are in flux. The market turmoil is bringing added nuance and complexity to the global supply chain. As businesses recover, optimizing their operations and engineering in terms of both agility and resilience will be critical.
