Procurement & Cost Management
12.12.2023 | Article
2024 Ocean Freight Insights
Navigate challenges to savings
Unlock savings and secure low rates in the 2024 ocean freight market amid overcapacity and competitive pressures.
Ocean Freight market outlook for 2024
2023 has been a challenging time for the Ocean Freight market, for both the shipping companies and their customers.
- 2023 saw a steep decline in Ocean Freight rates with rates in Q4 beginning to level-off back to pre-covid levels, driven by high inflation and interest rates triggering a slow-down in global economic output,
- In 2024 we believe reduced demand will continue to keep rates low into next year, due primarily to global economic factors and overcapacity. We are already seeing increased competition within the market as shipping lines compete for volume and revenue,
- There is a possible risk to rates which needs to be monitored is the heightened tension within the Red Sea due to increased risk of possible attacks to vessels linked to Israel. All major shipping lines have diverted ships for the short term and monitor developments, but this could put some pressure on rates if this issue continues.
- Shipping line companies will face a challenging year with profitability and revenues already being hit and continuing to trend downward.
- Market analysts forecast that low prices will continue through 2024, but at some point, will become unsustainable. Shipping lines will look to take capacity out of the market in order to increase rates, by having blank sailings (cancel sailings) • Shipping lines also need to manage the introduction of new environmental regulations, increasing costs as fleets are updated to meet the new regulatory requirements
Key takeaways:
- Significant opportunities to lower costs and lock-in lower rates for 2024
- An understanding of the complex logistics market is key
- H&Z logistics experts can support with strategy, tendering, negotiation and contracting
