Ocean Freight Services
Market, Supplier, Risk and
Competitive Intelligence

Industry Outlook & Drivers

Global Ocean Freight Services Market Analysis and Global Outlook

• Global ocean freight is dominated by large vessels (depicted in the map), 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
• Asia Pacific’s ocean freight market is dominated by small vessels, as the majority of the shipments are trans shipments between hub and spoke ports

Global Ocean Freight Services Market Outlook

The ocean container transportation market is dominated by the top five liners. They have global presence and are able to offer services across geographies in a seamless manner

The order book for containerships worldwide is at its highest point ever. The order book-to-fleet ratio increased to 27% in May 2022 from a low of 8.2% in October 2020. The order book as of today, with more than 6.80 MTEU and slightly under 900 vessels, is the greatest in terms of capacity in history. Orders for containerships do not come without risk, especially in light of the recent sharp rise in new building costs at Far Eastern shipyards. Prices for container vessels have increased by 30 to 35% compared to the end of 2020 due to decreasing yard slots, rising steel costs, and growing energy expenses.

Retail sales, industrial production, and net international commerce all fell in the Eurozone in March as a result of the war between Russia and Ukraine's adverse effects on consumer and company confidence. In April, pandemic containment measures were lifted, according to the S&P Global PMI surveys. As the European Union considers extending the ban on energy, imports from Russia to include oil and petroleum products, the downside risk is the potential for further energy supply disruptions that raise prices.

The geopolitical environment has significantly changed as a result of Russia's invasion of Ukraine on February 24. According to HIS Markit's projection, Russia's military assaults are likely to continue in the next few months despite fierce Ukrainian opposition. The result might be a protracted geopolitical deadlock. Russia's real GDP is anticipated to decline 10.2 percent in 2022 and 1.4 percent in 2023 due to sanctions and the exodus of foreign investors before starting a slow recovery. Ukraine's real GDP is expected to recover 46 percent in 2022, 30 percent in 2023, and 14 percent in 2024 as reconstruction moves forward with significant assistance from Western partners.

Global Player

• Highly consolidated players with multi-trade lane offerings. The top service providers have a strong global presence
• There is a focus on containing fuel costs and maximising utilisation rates of the ships

Regional Players

• Apart from the top 20-odd global players, there are numerous small operators who operate either regional shuttles or feeder vessels catering to a particular region
• The 3PL, freight forwarders and NVOCCs market slot spaces to smaller and regional shippers

3PL, freight forwarders and NVOCCs

• 3PL, freight forwarders and NVOCCs obtain slots from the carriers and in turn sell the container spaces to the end shipper
• Leading firms which function in this space are DHL, Kuehne Nagel, Expeditors, CEVA and DB Schenker
• They are able to consolidate volume and offer it to the ocean carriers

End Coustomers

• Direct sales are employed for high-volume buyers globally
• A majority of the top suppliers have direct presence in all continents
• While regional carriers target shippers who use predominantly three to five trade lanes

Global Ocean Freight Services Market Maturity

• Vessels with a capacity of more than 10,000 TEU depend on freight forwarders or 3PLs to fill space in the container to increase utilisation rate, so that cost per TEU will be reduced
• Approximately 102 million TEU volume of ocean freight handled by direct engagement with the ocean liners
• Approximately 15 million TEU handled by top 10 global freight forwarders
• 50–53 million TEU handled by regional or local freight forwarders

Ocean Freight Trend

Impact of Current Liners M&A Activities and Rate Trends

• The front-heavy delivery schedule for 2018 has place carriers in a tight spot during the slower first quarter, most critically after the Chinese New Year, when the demand will take its usual tumble. Ship utilization will probably take a hit during the lull and wipe out any pre-CNY boost given to freight rates – a potentially damaging scenario for Transpacific contracts
• However, as the demand has reasserts itself from the second quarter, the balance between supply and demand swing back towards carriers. These factors downgraded the expectations for the average global freight rates (blended spot and contract) in 2018 to 3.8 percent (previously 6.5 percent)
• Port and trade statistics are all trending up, with the strong momentum for global port throughput that started at the end of 2016 continuing to build through 2017. The strength of the demand recovery witnessed last year was beyond expectations, and subsequently, outlook for the world's port throughput in 2018 is expected to be approximately 4.3 percent
• Current market scenario indicates that shippers have nothing to fear from consolidation, the industry is heading toward a scenario, whereby a small handful of dominant carriers dictate matters, but there is still healthy competition in most trades for now. Shippers will need to stay watchful for deals that impact their main routes

Market Overview

According to the shipping market analysis, the major cost drivers are Bunker cost, vessel cost, THC, container cost, administrative cost, and currency adjustment factor. The ocean freight procurement strategies can be either ‘Centralized Procurement Strategy’ with a single point of contact and high risk of dependency, or ‘Regional Procurement Strategy’ with multiple points of contact and a low risk of dependency. The automated ocean freight procurement process reduces the freight rates by around 5 percent. The ocean container shipping industry is highly dominated by the top five players, with a market share of approximately 50–60 percent of the container volume being traded across trans-Atlantic and trans-pacific routes. As the container liner market is slowly getting commoditized with a major difference in service and price, the market share of the top players is robust, so, regional operators from the Northern Europe and Intra-Far East are trying to boost their performance to sustain in the container shipping market.

Why You Should Buy This Report

This freight business intelligence report gives insight into the regional and global markets, key challenges and sustainability practices in the container shipping market. It gives the positioning, financials and SWOT analysis of key ocean container shipping players like APM–Maersk and Hapag‐Lloyd. The report does a cost structure analysis and gives the cost drivers and freight rates. It gives insight into the best ocean freight procurement practices like engagement and sourcing models, procurement strategies, etc.