Ocean Freight Market: Volatility Alert!

Our US ocean freight market is volatile. We are living in unprecedented times. The state of current world affairs is in turmoil as business deal with The Covid-19 Pandemic.

The global economy has slowed down as The Pandemic causes governments to mandate business closure or reduce capacity. Demand for most goods has decreased as Americans stay home and maintain social distancing. Consequently, businesses are decreasing stock levels and stock turn-over. As goods sit on shelves longer, imports are beginning to decrease.

The past four months have brought decreased export volumes out of Asia as America consumes less. The steamship lines (SSL's) began implementing blank sailings as there were not enough containers (TEUs) to stop at many ports. Smaller ports experience zero sailing for two or three weeks. Nevertheless, SSL’s continue to service debt, maintain equipment and personnel.

As TEU’s pile up in Asian ports awaiting SSL booking confirmations, demand begins to increase. Ocean freight rates have steadily increased as SSL's seek to compensate low volumes with higher freight rates. Thus, importers have seen a crunch in margins as logistical costs increase without the ability to transfer such costs to consumers.

Ocean freight rates are beginning to soften as individual SSL’s begin to break the pricing trend to maximize vessel space. We should stay alert and welcome new commentary to maximize profit growth. The new market volatility should enable wise entrepreneurs to grow margins through strategy sourcing. Like and Follow to get the next report!