Drewry’s latest report shows that ocean freight rates for cargo moving under contracts on the major East-West trade routes fell by another 18% between February and May.
The Drewry Benchmarking Club Contract Rate Index has now declined by 29% since the start of this year to May. This is due in part to shippers securing big cuts in Asia-Europe annual contract rates and considerable reductions in their transpacific rates effective from May.
“The price war between carriers in the container shipping market continues and this is, for now, resulting in substantial reductions in contract rates for exporters and importers buying under contract,” said Philip Damas, head of the logistics practice of Drewry. “More and more companies are realizing both the tactical and the ongoing management value of benchmarking both costs and carrier service features.”
While exporters and importers are enjoying big reductions in their ocean procurement costs this year, the next trend for shippers could be how to identify and work more with carriers who can maintain reliable service levels despite their revenue pressures and the risk of carrier or alliance service instability.