Unpack Opportunities from 2023 Ocean Container Rates
While carriers might be missing the heady days of 2022, we're a few months into 2023 and ocean container rates are heading in a much better direction, as far as shippers are concerned.
The market has gradually adjusted back towards shippers, with rates normalizing from the crazy peaks of recent years. Once again, shippers have some degree of bargaining power and are beginning to use it.
2023 Ocean Container Rates Present Opportunities
We’ve all seen e-mails offering ocean freight container rates from China to the US of $1,000 to $2,000. To put those numbers in context, this is approximately one-tenth of what we saw during the pandemic.
As our supply chains adjust to this new reality, it's time to investigate possibilities for your international inventory moves. As we remain in an otherwise inflationary environment, 2023 ocean container rates present a compelling opportunity to reduce costs.
But wait! As container rates decline, so can service. Not all rates are created equal and some are simply too good to be true. Let's look at why that is.
Balancing cost with reliability
Down from $21,000 to $1,400 in just 15 months? Incredible!
But consider this: would you book a critical ocean freight shipment by responding to an unsolicited email for low low carrier rates, like the ones we get every day?
How do you know whether to trust the terms offered by your manufacturer, forwarder, or fulfillment partner? Pulling containers off of the port seems increasingly like a dark art: how many times have you heard that your driver is #2 in line…repeatedly over the course of five days? What is too good to be true?
Here are a few ways to assess cost through the lens of reliability:
- Comparative analysis: Review rates offered by other carriers and providers for the same route and service level. If the rate is significantly below the stated rates of other services, it could indicate that the provider is attempting to secure business at any cost, with an associated deterioration of service.
- Historical analysis: If the current rate is much higher or lower than its historical average, it may indicate that the market is experiencing a short-term spike due to capacity constraints or other factors, and the current rate may not be sustainable. If you trust the provider offering a low rate, lock it in! If it's on the high side, consider other routes or look to move the shipment at a later date, where possible.
- Service level evaluation: As hinted above, curiously low rates could be a red flag that the carrier is cutting corners on service quality, such as by using inferior equipment or not providing adequate tracking and responding slowly to information requests. In these instances, paying more for better service is likely to deliver a smoother shipment experience with less chasing up for your employees. In that sense, committing to a higher rate could still yield better value in the long run, as your team spends less time on logistics admin and more on their core competencies.
In other words, when you intend to bring on-time and exceptional delivery to your final customer, skimping on shipping costs has the potential to sink your reputation. All of the players in this space are service providers, but only a handful could claim to be true partners in your business operations. So shop around for better rates, but be wary of those that seem too good to be true...because they probably are!
Choosing the right partners
These considerations also explain why we're moving into this area of the logistics sector. To help clients, present and future, to secure improved freight rates via a team they can trust to get it right the first time.
When helping clients to secure global freight moves, the Capacity team applies the same discipline you'd demand in other areas of your supply network. We balance cost with reliability, service, and visibility to add value to your supply chain.
Working together with our global strategic partner, Mitsui USA (a wholly-owned subsidiary of Mitsui & Co., Ltd.) Capacity plans to become a true “end-to-end” service provider by offering and managing global inbound transportation services to our clients starting in the near future. 2023 ocean carrier rates are just the start. Stay tuned for a broad range of trusted partner services coming soon.
You can also mark your moves to market with reliable, though at times more expensive, global players like UPS SCS. You can have a conversation with forwarders who offer decent visibility via digital tools like Flexport.
If you need air for urgent or small and light shipments, look to DHL’s air rates for lanes you are seeking to move your product through. And do not forget that critical last mile piece – use a proven provider for drayage or ensure that your forwarder has a track record of handling this important final step.
In some cases, mundane details like chassis shortages (the thing you put the container on to get it on the road) can be a real obstacle to timely pulls from the port.
Ultimately, selecting a carrier for your product’s journey across the ocean is about trust.
Having your product on hand is critical to the success of your business. If it’s not in the right place at the right time, you are literally nowhere, regardless of whether you have paid $1,500 or $15,000. Yes, 2023 ocean carrier rates are finally coming down, but that doesn't mean you should shop in the bargain bin for a crucial part of your supply chain!
Talk to someone you trust and ask them where to start in optimizing your freight costs.
If you’d like to discuss how we can help you get great value for your money in this key area, we’re ready for the conversation. Contact us at firstname.lastname@example.org for assistance.