The Xeneta ocean freight rate benchmarking and intelligence platform shows the cost of moving goods by sea has plummeted during 2023.
On some corridors, such as the trans-Atlantic into US East Coast and Far East to Europe, we have seen short- and long-term rates drop by around 80%. Shipping liner companies are effectively subsidizing businesses to transport their goods around the world.
“At the recent Xeneta Summit in Amsterdam, we heard from leaders of the world’s biggest carriers who said they must, and will, take action in 2024. This includes blanked sailings, redeployment and scrapping of ships and slow steaming to control capacity. As one highly prominent figure put it, “why sail ships if the cargo isn’t there?”
Market volatility is coupled with the challenge to become more sustainable in 2024 through International Maritime Organization’s and EU ETS emissions regulations.
Everyone has good intentions when it comes to the environment, but no one is prepared to pick up the bill. The industry is telling carriers to risk investing staggering sums of money on climate-friendly vessels with no guarantee the market will turn in their favor. Without a change in attitudes, the emissions targets are doomed to failure.
The industry is coming from such low service reliability caused by the pandemic chaos, it’s almost impossible for it not to improve further in 2024.
For example, reliability of container arrival from the Far East to Europe was 66.9% in August compared to 30% in 2022. The Far East to US West Coast is now 44.6% compared to 16% a year ago.
These improvements are a result of the system becoming less strained post-COVID rather than carriers operating fleets more reliably. Shippers will also argue service levels are still not at an acceptable level to implement just-in-time principles into their supply chain with any degree of confidence.