Someday, there will be an epic poem penned about the drama of ocean freight rates. More likely, it will be a sea shanty, a joyful chorus of the wild swings in price we’ve seen since the pandemic started. Whoa, once upon a sea in a trans-pac lane, carriers charged prices that were insane. Then the bottom fell out, and they began to pout, but learned that two can play that game! Granted, it’s more of a limerick, but the sentiment is there. In news to surprise absolutely nobody, the pendulum that gave carriers record profits in 2021 has drifted past homeostasis and dipped in favor of, well, not carriers.
As expected, the low dip in prices was unsustainable as carriers pulled out capacity to meet lowered demand, tightening the spaces where less cargo demand hit. However, the lower demand wouldn’t last as equilibrium naturally let prices drift back to the rather-comfortable-for-everyone pre-pandemic level.
Strangely, despite knowing prices would level out, carriers like ZIM have willingly stated that if rates drop too low, they’ll just stop sailing. A rather empty threat as the trans-Pacific trade lane remains one of the largest trade arteries in the world, even in slow seasons. It is much more likely that we will see a return to bunker surcharges and graduated rates for areas that are seeing particularly high or low demand.
According to The Loadstar, “Container spot rates between Asia and the US west coast have collapsed, from over $20,000 per 40ft in mid-2021 to just $1,000 and carriers desperately need to raise short-term rates in an effort to boost stalled annual contract negotiations.”
And it looks like we’re not out of the woods where market volatility is concerned. Now is the key time to ensure you have a skilled and experienced logistics partner in your corner. With rate fluctuations and fees in the news more than ever, you need Coppersmith by your side to ensure you’re getting the service you need at a rate that’s fair and understandable. Don’t wait until you’re being tossed by the waves of uncertainty, contact us today for assistance.
