In late 2022, industry analysts predicted a self-regulation of freight rates, which would produce record lows as the transportation sector settled down post-pandemic. While some carriers remained hopeful in the first half of 2023 and banked on a resurgence in rates in the latter half of the year, their hopes have been largely unmet, as rates have remained relatively low. There are now signs within the ocean freight sector that hint at an upcoming shift in the tide. Indicators are suggesting that the period of record-low rates that shippers have been capitalizing on may soon be coming to an end. When they do, shippers should be prepared.
Are Some in the Ocean Transportation Industry Starting to Change Their Tune?
The story at the end of 2022 was the expectation of a quiet year ahead. Experts had anticipated a consistent slump in freight rates for 2023 with low volumes, even during peak season. This prediction was driven mainly by the belief that the aftermath of the pandemic would lead to a longer period of economic recalibration, marked by low consumer demand.
However, as 2023 progressed, the dynamic started to shift and paint a different picture. One factor was the reduction in shipping capacities at a time when there was an unexpected surge in inventory restocking. Businesses started replenishing their warehouses, anticipating an eventual increase in consumer demand and protecting themselves from future disruptions. This laid the foundation for freight rates to rise. At the same time, ocean carriers have taken a more cautious and strategic approach. Despite an increase in vessel orders, these carriers have cut back on capacity.
These events signal a potential upward trend for freight rates in the near future. After a season of low rates, the evolving market dynamics of 2023 show increases are coming. As businesses make adjustments to respond to demand and anticipate future changes, the industry is once again proving its capacity for unpredictability.
Are the Good Times Gone? With the Market Due to Pick Up, Shippers Turn to Efficiency Measures
It should come as no surprise when such shifts happen in the industry; shippers should view any trend as only a brief opportunity. To build up resilience against inevitable market fluctuations, they must invest in building efficiency within their supply chains. They can reduce transportation spend even during times when freight rates are on their side. To do this, they can leverage three opportunities—optimizing routing and scheduling, taking a proactive approach to issues, and ensuring accurate billing and document management.
Optimized Routing and Scheduling
With data and analysis on vessel movements, port trends, potential congestion, and weather conditions, shippers can make informed decisions to avoid delays and optimize transit times. Real-time tracking offers immediate insight into a vessel’s current location, enabling adjustments in response to unexpected circumstances, while historical data can provide added insights. Optimized routing to avoid port congestion and other delays can help shippers reduce freight costs, minimize demurrage charges, and bring the added benefit of faster deliveries.
Proactive Issue Management
With Vizion's container tracking capabilities, shippers can be aware of potential disruptions early and take proactive measures to address issues before they escalate. They can establish strategies or backup plans for various scenarios and save time in the long run instead of navigating challenges after they arise. Planning and preparedness help shippers maintain a level of predictability, which is an opportunity for greater efficiency. Shippers can avoid additional expenses and maintain optimal operations by minimizing disruptions and keeping freight moving smoothly.
Accurate Billing and Documentation
Vizion's solutions provide accurate and reliable data on container movements and port dwell times. Shippers can use this data to validate invoices from carriers and terminal operators, ensuring that they are only charged for the services they actually receive. If an invoice claims a container was stored at a port for ten days, but Vizion’s data shows it was only there for seven, shippers can challenge and correct this discrepancy with the data to back it up. This level of transparency in billing helps shippers avoid overcharges and billing discrepancies, contributing to cost-effectiveness in their ocean freight operations.
Stay Proactive with Vizion
More shippers are leveraging Vizion’s advanced data and insights to uncover inefficiencies they otherwise couldn’t detect. With real-time, complete container visibility, shippers can better strategize their freight movements for speed and efficiency and find opportunities to reduce costs, being better prepared for whatever rates the freight market has in store.
To learn more about how Vizion’s container data can help you increase your efficiency and resilience, contact us today to book a demo.