In recent years, there has been increasing volatility in ocean freight rates: in the last three months of 2023, for example, quotations registered sharp falls, which have inevitably influenced market trends.
The uncertainty in the industry raises many concerns, in particular about the resilience of the supply chain for 2024.
Taking stock is the analyst firm Xeneta, which in its latest outlook painted a complex and uncertain new year for container transport.
Ocean freight rates to rise in 2024
According to Xeneta, in fact, ocean freight rates will increase dramatically, making it no longer economical for carriers to transport goods contracted under the 2023 tariffs.
As stated by Patrik Berglund, CEO of the company: “The cost of transporting containers by sea fell by 60 percent in 2023, and on some routes (such as from the Far East to Europe) the drop was even more pronounced, reaching 80 percent for both short- and long-term contracts. Currently, freight rates are so low that companies are in fact operating at a loss in many cases.”
This is a situation that cannot be tolerated much longer and which will lead, in a physiological manner, to an increase in tariffs.
Although it is not known precisely when the freight rate increases will begin to materialise, Xeneta paints a less than reassuring picture. On the one hand, he says, there will be customers who signed long-term contracts in 2023 at very low rates and, on the other hand, those who will sign agreements in 2024 at higher rates.
The companies could then decide to leave on the ground the cargoes of the former, in favour of cargoes with a higher price.
Adding to the uncertainty of this situation are the ongoing geopolitical crises in Ukraine and the Middle East and the entry into force of the Emissions Trading Scheme (ETS) in the maritime sector in 2024.
Overcapacity and reliable contracts
This situation is an important challenge for all customers who will have to learn how to protect their supply chains.
One hope comes from overcapacity, which, should it continue into 2024, could be an incentive for carriers to load all cargoes, regardless of freight contract rates, in order to fill the ships. This condition could also benefit customers with long-term contracts concluded in 2023.
Another lies in the choice of experienced and reliable operators.
Over the years, we at Marfreight have handled various situations involving market volatility, always striving to offer our customers consistent solutions in line with their expectations and needs.
Already last year, for example, following the exaggerated increase in freight rates in the spring, we offered our partners contracts on a monthly basis, with easily affordable instalments.
As industry operators who care about their customers’ businesses, we have an obligation always to be ready to face and manage market changes, to ensure the best solutions in terms of security and value.