News & Press


Riding the Waves: Ocean Freight’s Rate Fluctuations

June 12th 2024

Rogers and Brown

Written By: Gabe McGann, Vice President of International Operations at Rogers & Brown

Here we go again! What exactly is a Diamond Tier service? Why are vessels suddenly overcapacity? Why is my ocean freight rolling a week even though I am paying twice what I did two months ago?

These are all common questions companies with an international supply chain are asking themselves. Steamship lines will want you to believe this is simply demand-driven or perhaps having to add a few vessels due to the Red Sea situation, which has had an impact that reaches every trade lane in the world. A deeper dive finds that it is much more complex than that. This article will help pull back the curtain a little further into what we all might expect in this “post-pandemic era” shipping landscape.

Recovery and Return to Pre-Pandemic Levels

Two years ago, we were in the middle of the most challenging shipping period of the modern era. Space was extremely limited, and subsequently, ocean freight rates reached unprecedented levels. Consumer spending drove much of the demand while importers tried to re-stock depleted inventories as quickly as possible. It wasn’t until the fall of 2022 that we started to see some relief, and rates began receding.

During the chaos, some wondered if the container rates, specifically in the Transpacific market, would ever return to pre-pandemic levels. Surprisingly, it didn’t take that long. By the spring of 2023, rates from Asia to the United States resembled levels importers had become accustomed to prior to the surges of 2021 and 2022. Demand remained soft through December, and other than a slight surge in January of 2024, which quickly subsided post-Chinese New Year, rates remained down through the first quarter of 2024.

Fast-forward to today (June 2024), and if you blinked, you missed the rate you paid for a container that departed in April, which has now at least doubled. Space that was so readily available for the past year+ is now in scarce supply, and carriers are back to offering premium prices not to guarantee but simply to give you a better chance to sail as scheduled.

Understanding Rate Swings

At this point, you are likely assuming that from April to June, a significant influx of volume is hitting the market, and as a result, ocean freight rates have increased. That is just one piece of a bigger puzzle. The pandemic period proved to carriers that people were willing to pay and pay premiums if they had to. Just-in-time shipping was not returning, and supply chains could not allow inventories to deplete to the catastrophic levels they did a few years ago. Therefore, anytime demand can outweigh space, we are likely to see much bigger rate swings than ever before.

It has been reported that volumes in May 2024 on the transpacific eastbound market were only 11% lower than they were in the same period of 2022. However, capacity in the same market was 22% less in May 2024 than it was in the same period of 2022. Those numbers paint a very clear picture that what we are seeing is just as much manufactured as it is organic. There is now proof that carriers can push rates higher than they were capable of pre-pandemic.

Future Outlook: Ocean Freight Predictions and Patterns

These rate increases are likely to continue anytime demand outweighs available space. Most predict demand will remain high until late Summer 2024 or until we get past the peak season. When that happens, the carriers will fall right back into the pattern of quick rate reductions to try and keep shippers’ cargo on their bills of lading.

Hopefully, this has shed some additional light on the market’s future. There will always be ups and downs, peak seasons, turmoil, and natural events no one can control. As far as shipping rates go, the swings are simply going to continue to have higher peaks and bigger swings than ever before.

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