Well, here we are. After a boom beyond belief, a bust has come for the ocean freight industry. Signs of doom abound. According to the Freightos Baltic Index, daily average rates in popular Asia to the U.S. West Coast routes have dropped by more than $10,000 YoY, from $14,000 in 2022 to their current low of roughly $1,500. But this rate drop isn’t limited to the Asia-U.S. West Coast routes. Across routes and markets worldwide, spot rates are in free fall, and carrier revenues are falling suit.
- Israel-based carrier ZIM reported a Q1 loss of $58 million.
- South Korean carrier HMM is searching for ways to cut costs falling by 90% drop in revenue YoY, according to industry-publication the Maritime Executive.
- Singaporean carrier Ocean Network Express (ONE) revealed a 10% drop in revenue in 2022 in its most recent earnings report.
Despite this doom and gloom, hard times bring opportunities for some stakeholders in the ocean transportation industry. As rates fall and carriers struggle to compete for volume, shippers are offered a unique opportunity to reallocate transportation spend and reinvest in bolstering efficiency, collaboration, and resilience. In this article, we’re looking at the causes behind the slump, the industry outlook in the coming months, and how shippers can swim as the industry sinks.
How Can Shippers Swim as the Industry Sinks? By Investing In Key Values.
While plummeting rates are taking a toll on carriers, shippers are being offered a unique opportunity to reinvest in operations. After enduring sky-high pandemic-era container rates, smart shippers are searching for innovative strategies to bolster core values and make the most of difficult times. By reinvesting in the key values of performance in 2023, shippers are learning to swim as the industry sinks.
Efficiency to Meet Demand
With rates plummeting, many shippers are searching for opportunities to reinvest in efficiency in ocean freight operations. In doing so, shippers are working to meet two core demands of today’s customers: speed and reliability. According to reporting from Forbes, 32% of global shippers will abandon an order if the shipping time is deemed to be too long, and a study from Voxware revealed that 30% of customers are less likely to buy from an online retailer who failed to deliver on time. Facing higher-than-ever delivery expectations, ocean shippers are under pressure to ensure that fulfillment centers stay stocked, and that ocean shipping operations are equipped to support the efficient, reliable delivery that customers demand.
Collaboration in a Fractured Industry
As carriers struggle with falling volumes, some are choosing to take dramatic steps to bolster their bottom line. From slow-steaming to blank sailing, the dramatic cost-saving decisions of carriers are resulting in headaches for shippers. As a result, shippers are being forced to diversify carrier networks. In addition to diversified transportation options at sea, sky-high demurrage and detention fees are forcing shippers to reevaluate port-side operations.
Facing these troubling trends, today’s shippers are more dependent than ever on collaboration. Increasingly, shippers are turning to innovative solutions to bolster visibility over operations, as well as cloud-based software solutions to ensure maximum collaboration with all supply chain partners.
Resilience to Face Unpredictable Times
If the COVID-19 pandemic taught the global supply chain anything, it’s the importance of resilience. Black swan events–whether caused by global pandemics, unpredictable conflict in vital trade lanes, or increasingly volatile weather–are no longer an occasional feature of the supply chain but a constant presence in the mind of today’s transportation professionals. Preparing for these events by investing in resilient infrastructure and operations ensures that shippers won’t be left scrambling for solutions when catastrophe inevitably strikes.
By investing in software that improves resilience through increased visibility and awareness, shippers can decrease reaction times and provide customers with the fast, reliable service they demand.
Are the Hard Times Here to Stay?
Unfortunately for carriers, the answer is yes, at least for now. Recent data from FreightWaves SONAR shows little chance of an uptick in the second half of 2023, due mainly to persistently low U.S. imports and a slow start to China’s newly reopened manufacturing sector. Fortunately for shippers, however, the bleak forecast means that now is the time to reinvest in the core values of an effective supply chain strategy. By reinvesting in efficiency, collaboration, and resilience, shippers can take advantage of a bleak moment in the transportation industry to swim rather than sink.
As the Industry Sinks, Shippers Swim with OpenTrack’s Leading Ocean Container Tracking Software.
With experts predicting that the hard times are here to stay through the second half of 2023, shippers are turning to innovative strategies to reinvest in the core tenets of supply chain management in 2023: efficiency, collaboration, and resilience. With coverage of 97% of global shipments, OpenTrack’s ocean container tracking software provides shippers with a robust suite of ocean container tracking assets to bolster efficiency, collaboration, and resilience in their operations.
- Ocean Freight Visibility ensures that shippers can gain instant visibility over high-stakes ocean container operations.
- Rolled Cargo Alerts mean shippers are notified quickly when blank sailings occur, providing maximum reaction time.
- API Integration provides streamlined integration, helping shippers get the most out of ocean container tracking.
Book a demo with OpenTrack today, and see what the latest in ocean freight visibility can do for your business today.