Turbulent seas or clear sailing? The crash of ocean freight pricing

Fluent Cargo's advanced multi-modal routing engine and platform empower users to find the most cost-effective and efficient ways to transport any shipment to any global location, utilizing all available modes of transport.

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The COVID-19 pandemic has instigated seismic shifts across a broad spectrum of industries, and the ocean freight industry is among those feeling the aftershocks. After sailing through two prosperous years marked by record profits, the sector now finds itself in stormy waters. This turbulence is typified by the collapse of freight rates, leaving ocean freight carriers in particular scrambling to keep their operations afloat. A critical barometer of the industry's health – the spot rates – are currently free falling, foreshadowing a potential recession and echoing the deflation of the pandemic-propelled US import bubble.

The precipitous decline in the spot market illuminates an alarming trend in the industry. Prices have plummeted by an astounding 80% from their peak in September, which recorded prices over $20,000 for a 40-foot container between Asia and the US West Coast. This downturn serves as a stark reminder of the industry's volatility, contrasting starkly with the COVID-19 years that were characterized by carriers enjoying a surplus of power. Bolstered by a surge in demand for shipping services, these carriers were able to inflate rates and accumulate record-breaking profits.

However, this advantageous climate began to shift by the close of the previous year. A dip in the importation of retail commodities such as furniture, appliances, and apparel instigated a decline in demand. This was an unforeseen blow to major carriers like Mediterranean Shipping Co (MSC) and A.P. Moller-Maersk. Having already committed to the procurement of hundreds of new container ships, they suddenly found themselves in a situation of excess supply and diminishing demand.

Despite the somber outlook, there are opportunities for those in the industry with the foresight and flexibility to innovate and adapt. An exemplar of this adaptability is Fluent Cargo, an Australian technology company specializing in shipment planning and research. Fluent Cargo‘s advanced multi-modal routing engine and platform empower users to find the most cost-effective and efficient ways to transport any shipment to any global location, utilizing all available modes of transport.

The need for efficiency in planning has been underscored by this volatility. Shippers not knowing if their cost of moving goods would fluctuate by 50% day to day seized up many import and export operations. Andy Greig, Fluent Cargo‘s Chief Technology Officer, is bullish about their platform's potential to transform the industry. Andy tells us, "Fluent Cargo allows our customers to plan their shipments meticulously yet easily, like booking a vacation. We provide access to vital information on schedules, port-level details, and a host of other factors that could influence their shipping choices."

Greig expects this platform to attract a diverse range of industry players, including logistics providers, freight forwarders, and businesses from an array of sectors. Currently free, the platform is poised to evolve with the development of additional premium features. The platform's extensive, digitalized global shipping network integrates data from a plethora of partners, making it a comprehensive hub for international shipping data and information. Live tracking information of every aircraft and ocean vessel is then processed through Fluent Cargo's proprietary algorithms, generating custom search results tailored to each user's unique needs.

The recent collapse of ocean freight rates serves as a stark reminder of the capricious nature of global markets, particularly in the wake of significant global events like the COVID-19 pandemic. It brings to the fore the crucial role of technological innovation and the essential contributions of tech startups and innovators.

As the industry heads into uncharted waters, companies like Fluent Cargo are demonstrating that a willingness to adapt, combined with the effective use of technology, could be the difference between weathering the storm or sinking. As technology continues to permeate every facet of the industry, the ocean freight sector may well be on the cusp of a significant transformation, with the potential to redefine shipping as we know it today. The digital solutions these innovative players bring to the table are not only equipping them for survival but also placing them in a position to thrive in the post-pandemic world.

Jon Stojan is a professional writer based in Wisconsin. He guides editorial teams consisting of writers across the US to help them become more skilled and diverse writers. In his free time he enjoys spending time with his wife and children.

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