Ocean Shipping Strategies: Lower rates in 2009? Don’t count on it

Anemic demand and overcapacity may suggest otherwise

Many ocean shippers feel that rates should be dropping in 2009 because ocean carriers have ordered so many new vessels. Furthermore, many of the same shippers feel that because carriers have had a couple of good years they’ll be willing to negotiate more forgiving contracts in the near-term for “time-volume” deals. Add to this the fact that conference systems are under attack for anti-competitive pricing, and one might assume that a softening rate structure will ensue.

All wrong, say industry analysts.

It all looked so easy to predict just a year ago. Because more vessels were being placed in the Asia-EU trade, U.S. shippers began booking fewer direct West Coast calls, opting instead for all-water service to the East Coast. Landbridge and warehousing costs notwithstanding, it appeared that this would provide for sustainable savings and more reliable service.

Encouraging news was coming from trading partners in the EU as well, principally over the dismantling of carrier conference systems. Given that rates could not be collectively set, shippers were banking on a free market pricing environment that would “even the playing field.”

Finally, there was the promise that smaller U.S. West Coast ports in Mexico and Canada would help shippers hedge their bets on Pacific Rim distribution, thereby saving still more money in the transpacific trade.

Source: http://www.logisticsmgmt.com/article/CA6610434.html