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2 min read  | Logistics

Why Shippers Should Be Worried About Low Container Rates

Katherine Barrios  | July 12, 2016

One would think that lower container rates would mean lower shipping costs and thus happy shippers, right? Think again, in our latest Twitter survey, shippers tell us otherwise. We asked if shippers should be worried about low container rates and over 55% of respondents indicated that yes, shippers should be concerned with 36% saying no and 9% of respondents did not know.

[Twitter Survey] Should Shippers Be Worried About Low Container Rates

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Indeed, according to the Journal of Commerce, while logistics directors are patting themselves on the back for securing rates almost half of what was secured the previous year, they are concerned about next year with the possibility of higher rates and rolled cargo. One retail importer told the Journal of Commerce, “We have locked in very low prices but once the carriers create an artificial space shortage by taking ships out of the trade lanes, they will be able to demand higher prices from the NVOCCs and smaller importers and then favor those shipments. Therefore, unless I also agree to higher prices, I will have a hard time getting space.” 

 

Retail Importer Comments On the Low Ocean Freight Rates

 

Low Rates May Equal Subpar Service

At the same time though, shippers should take more than rates into consideration - service levels, speed, value-added services etc. In other words, shippers should be looking for a partner to ride the uncertain economic waves. Lower rates are great but what good are they if the service level is subpar?

 

Be sure to check out one of our earlier blog posts:It’s Not about Price Alone. How do You Select Your Supplier?’ for more on this topic.

 

The overall ocean container market is a concern for shippers and has resulted in many container vessels scrambling towards revised or new alliances to remain alive. For some, mergers & acquisitions have become an option and for others, bankruptcy may occur. 

So, while shippers should indeed be concerned about lower container rates, they should also be concerned about the overall health of their ocean container partner.

 

 
 

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