Global Ocean Freight Market Intelligence

Report Coverage

  • Supplier Landscape
  • Scrapping Trend of Major Carriers in Ocean Freight
  • Current Challenges: Consolidation of Service
  • Trend Analysis of Ocean Freight Price Index and Bunker Index

Table of contents

  1. Executive Summary
  2. Market Overview: Global Ocean Freight
  3. Price and Cost Analysis
  4. Best Practices and Engagement Models

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Global Market Outlook on Ocean Freight industry

  • Global ocean freight is dominated by large vessels, as VOCs have standard service schedules and direct port calls. The size of the vessel deployed is also dependent upon trade volume, draft at ports, and handling capacity.
  • The Asia Pacific’s ocean freight market is dominated by small vessels, as the majority of the shipments are transshipments between the hub and spoke ports.
  • Factors determining ocean freight market rates are Route Supply-Demand Dynamics, Fuel and Surcharges, Ship/Charter Rates, Container Supply, Handling/Port Charges, full container load, and less than container load.
  • The ocean freight market size is dominated by the top five players, with a market share of approximately 50–60 percent of the container volume being traded across transatlantic and transpacific routes.

Supply–Demand Situation and Outlook

  • The current supply-demand imbalance in the industry needs to be considered to manage the capacity deployment.
  • The recent alliances and Merger and Acquisition (M&A) activities will enhance the liner's capabilities to manage actual deployed capacity better, leading to freight rate recovery.

Tightening of Space along Major Trade Lanes

  • Tightening of the space situation has been witnessed across all three major routes (APAC to North America, APAC to Europe, and APAC to Oceania), leading to higher rates.
  • With rates expected to escalate further during the post-peak season, the industry should guard against carriers imposing GRI and PSS.

Importance of Free Time in Demurrage and Detention

  • “Free Time” is one of the most important cost components in ocean shipping and ignoring its significance could result in unnecessary detention and demurrage charges.
  •  The importance of free time is further accentuated by the current state of port congestion and unavailability of chassis during the busy period.

Negotiation Opportunities to Reduce Risk

  • Maintaining a well-established set of KPIs, like Actual Time of Departure and Percentage of booking confirmed, based on booking date, will facilitate a reduction in risks. It should be seen that 90–95 percent adherence to KPIs should be maintained as a best practice.
  • Storage cost is an important cost component (which increases exponentially) and it can be negotiated with a partner at a private inland port for free or reduced storage rates.

Capacity development as new ships are being delivered and inducted into fleets should be managed to prevent sudden changes in the ocean freight market rates. The trade lane between Asia and Europe is going to bear the brunt of rate pressures as well as capacity pressures owing to the induction of new vessels along this lane. It is expected that vessels with 10,000 TEUs that are in production will soon be inducted along this lane. The trans-Pacific trade lane will see larger ships displacing the smaller ships that ply this lane. The Intra-Far East and Intra Europe lanes are dominated by 1,000 to 1,999.

Supply–Demand Dynamics: Imbalance in the industry

The industry has been witnessing a supply-demand imbalance. The expected global container shipping capacity of 8.4 percent is likely to exceed the demand growth of 3.1 percent in 2017, which was witnessed over the past five years.

  • Overcapacity: With regard to new-build capacity, one million TEUs are expected to be delivered, which is above and beyond one million TEUs that are idle. The current overcapacity is mismatched to the financial cycles. Overcapacity or the sudden induction of excess capacity has the ability to disrupt the ocean freight market trends, especially in pricing.
  • Risk of idle ships being reinstated: Around 6.5 percent of the global shipping capacity is idle, as operators have withdrawn services to cut losses and have returned chartered-in vehicles when their lease expires. Operators are expected to reinstate their idle-owned capacity, as freight rates return to more profitable levels.

Supply-Demand Imbalance

  • The global container shipping capacity witnessed a net capacity growth of 1.2 percent in 2016. It was expected to grow by 8.4 percent in 2017, followed by 5.9 percent in 2018, 1.2 percent in 2019, and 0.01 percent in 2020 (on a gross basis)
  • This capacity is higher compared to container shipping demand growth, which was around 3.1 percent per annum over the past five years.
  • In recent years, an uptick has been witnessed in the global trade demand, with global container shipping volume rising to 5.3 percent Y-o-Y in November and December 2016.
  • With freight rates increasing, the order book for new containerships is about to resume after being dormant for over 18 months.
  • The French carrier, CMA CGM, has confirmed nine 22,000 TEUs and has signed a letter of intent with two Chinese shipyards.

Ocean Freight Market Overview

  • The global ocean freight outlook 2018 showed that the ocean container transportation market is dominated by the top five liners. They have a global presence and are able to offer services across geographies in a seamless manner.
  • Global ocean freight market update is estimated to be approximately 170 million TEU.
  • The utilization of the ocean freight depends on the following factors: Type of transportation requirement, Value of the product, Time criticality of the product, Annual volume of the product.

The key ocean freight trends include:

  • More and more industries are adapting their loads to be suitable for overseas transportation services by sea freight which is a driver of this industry.
  • The freight market is dominated by major global players. In order to protect their domestic players, governments are implementing Cabotage Regulation.
  • Due to minimal visibility of the THC levied by the 3PLs/Freight Forwarders.
  • Global shippers from industries such as F&B and electronics are focusing on the automated transportation process.
  • Environmental concerns and sustainability have now become a key point that the ocean freight industry is adapting to. This is also driving research and development for newer technology to increase the efficiency of overseas transportation services. When more goods are carried with a lower carbon footprint it makes good financial as well as environmental sense.

Why You Should Buy This Report

  • The report contains information on the market overview, ocean freight market analysis, sourcing models, freight rates, cost structure analysis, sustainability practices, etc.
  • SWOT analysis of key players in the global ocean freight market such as APM–Maersk, CMA CGM, Hapag‐Lloyd, etc.
  • It details centralized and regional ocean freight procurement strategies and pricing components benchmark.
  • The report studies all the different aspects of ocean freight such as logistics and transportation, overseas transportation services, haulage, 3PL, coastal transportation, containerized freight, containerized transportation, customs brokerage, terminal handling, freight forwarding, and the port capacity for the handling of ocean freight.
  • The port capacity and the outlook and dynamics of the different shipping lanes are also discussed. The effect that the capacity of the lane has on freight charges are also detailed for each lane.
  • The report studies the global perspective of the ocean freight services logistics and transportation market. It also details the past trends and why they have happened. The future forecasts are also supported by the factors that would influence and cause the trend.
  • The significant details about the major players in the ocean freight market are also listed and described.

Ocean Freight Market Frequently Asked Questions

  1. List some of the general ocean freight market outlook facts from an industry perspective?
  2. Based on Beroe’s report, the following are the common ocean freight market facts:
    -- It’s dominated by large vessels wherein the size of the vessel deployed is dependent on the trade volume, draft at ports and handling capacity
    -- Factors like route supply-demand dynamics, fuel & surcharges, container supply determine the ocean freight market rate
    -- The Asia Pacific’s ocean freight market is dominated by small vessels as the majority of shipments and transshipped between the hub and spoke ports

 

  1. Who are the key players in the global ocean freight market industry? 
  2. The 3 key players of the global ocean freight market industry are – APM Maersk, CMA CGM, and Hapag Lloyd

 

  1. What is the importance of “Free Time” in the ocean freight industry?
  2. As per the ocean freight market analysis report, “Free Time” is the most important cost component in this industry, and ignoring it can result in unnecessary detention and demurrage charges. It also plays an important role and is accentuated by the current status of port congestion and the unavailability of chassis during the busy period.
     

 

  1. What are the key ocean freight market trends worth knowing?
  2. As per the ocean freight market update 2020 report, the key trends of ocean freight industry include:
    -- The freight market is dominated by global players and to safeguard the interests of their domestic players, the governments are implementing Cabotage Regulation
    -- Due to minimal visibility of the THC levied by the 3PLs/Freight Forwarders
    -- global shippers are relying more on automated transportation process

 

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