According to a survey done by Freightos, one of the findings was that although ocean freight rates have fallen significantly in the last few months, prices are still about 6.5 times higher than in June 2019. 

As at the end of June this year, the cost per container was $8,934 from China to the West Coast of the United States, down 38.5% from the beginning of the year and reduced by nearly 50% from the same period last year, but is still quadruple the rate in June 2020. Industry watchers expect shipping prices to stay above pre-pandemic levels through to at least 2023.

With significant delays in shipping, importers have had to accept the additional expense that comes with keeping their shelves stocked, not to mention that more than half the respondents of the survey are planning to place peak season orders early this year due to lessons learned from delays during last year’s peak season.

Small business buyers, in trying to lessen the impact caused by disruptions, are using multiple logistics service providers or switching shipping modes – from ocean to airfreight, or from FCL to LCL.

88% of the businesses surveyed reported supply chain difficulties in the past six months, with the lockdown in Shanghai negatively impacting 68% of respondents. 

Retailers are already cutting back on orders with suppliers saying they are dealing with excess inventory due to over-ordering during the pandemic.

The reduction in consumer demand in the U.S. market has caused ocean freight rates, and especially ocean spot freight rates, to drop considerably since January this year.

The recent and continuing unprecedented chaos in the freight market has brought the dire need for transparency and visibility into actual ocean freight rates.

According to a new report from S&P Global Market Intelligence, container freight rates are expected to fall by 20-30% in the second half of the year.

We can expect to see the impact of the steady decline in freight rates on some South African trades. However, the fear is that capacity – which in our case is provided by relatively smaller vessels – may be reduced through scheduling and blank sailings. Despite the significant decrease in rates, liner shipping is still on course to smash last year’s record profits by as much as ↑73%, as net income this year will likely reach $256 billion.