In many ways, the last 18 months felt more like a roller-coaster ride than the global shipping industry. The economic turmoil sent pricing into a steep decline, and as quickly as rates fell, they rocketed back up to even higher levels in early 2010. The last few months of the year witnessed renewed downward pressure on pricing, but the decline was more orderly.
The 2011 market appears – and we know appearances can be deceiving – to be taking on more of a traditional/historical pattern. Rates will be weaker in the first third of the year, the general-rate-increase battles will occur in May and June, followed by the traditional peak-season polka. Overall, we expect pricing to move in a narrow band as supply and demand tug at each other, but remain fairly equal throughout the year. With market growth expected at 7 to 9 percent and supply growth at 10 percent, carriers will be working hard to avoid any major downward shifts in pricing.
With some degree of price stabilization, 2011 should be a good year for all market participants to focus on execution and supply chain optimization vs. trying to chase market share by altering pricing. The “chase market share via pricing model” has rarely, if ever, proven effective within our industry, and we hope the entire market sidesteps this trap door in 2011. The savings that can be realized through supply chain efficiency and information visibility far outweigh the last $25 to $100 per container that can be had by chasing freight rates on a weekly basis.
Now where was that exit from the ride?