Global Ocean Freight Market Intelligence

A comprehensive Ocean Freight Market Report that answers these questions

A comprehensive Ocean Freight Market Report that answers these questions

  • What are the key trends in Global Ocean Freight category?
  • Am I paying the right price?
  • Am I working with the right supplier?
  • What are the major challenges and risks in Global Ocean Freight industry?
  • How is Global Ocean Freight industry performing?

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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 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
  • The ocean freight market size is dominated by 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 need to be considered to manage the capacity deployment
  • The recent alliances and Merger and Acquisition (M&A) activities will enhance liner's capabilities to manage actual deployed capacity better, leading to freight rate recovery

ocean freight market

Tightening of Space along Major Trade Lanes

  • Tightening of 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 reduction in risks. It should be seen that 90–95 percent adherence of KPIs should be maintained as a best practice
  • Storage costs is an important cost component (which increase exponentially) and it can be negotiated with a partner at a private inland port for free or reduced storage rates

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
  • 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 is 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 the 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 shows that the ocean container transportation market is dominated by top five liners. They have 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:
  • 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

Why You Should Buy This Report

  • The report contains information on the market overview, 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.

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