Freightos: Opacity, pricing fluidity continue to plague container industry

Global trade in 2016 was sluggish, as import volumes and global container throughput dipped, but the negligible dip in global trade was accompanied by radical shifts in freight pricing.    Online freight marketplace Freightos said stagnant global trade and container volumes led to massive and opaque price fluctuations in 2016.
   Freightos CEO Zvi Schreiber noted how global trade in 2016 was sluggish, as import volumes and global container throughput dipped. However, the negligible dip in global trade was accompanied by radical shifts in freight pricing.
   “Seasonality played a strong role in the beginning and middle of 2016. Incredibly low rates in April and June were followed by a brief increase in rates, but the influx in demand created by Hanjin’s bankruptcy in late August sent rates to peak season levels unseasonably early,” he said. “Lacking increased tolerance for pricing spikes, anticipated October and November spikes were not forthcoming.”
   Schreiber also noted how opacity and pricing fluidity continue to plague the container industry.
   The average freight-all-kinds spot rate for transporting a 40-foot container from Shanghai to Long Beach with 13 of the 20 largest liner companies as recorded on a single day in December totaled $1,506.
   However, there was a 31 percent variation between the low and high rates quoted to forwarders, with price ranges even higher for shippers using those forwarders, Schreiber said. In addition, better spot rate negotiators who get the very lowest prices are more likely to see their prices fluctuate more. But they are far more exposed to external factors, like Hanjin’s bankruptcy, where carriers adapt to supply and demand changes.
   “U.S. imports at ports on both coasts tracked similar trends during 2016,” Schreiber said. “The one exception was an increase in East Coast import prices in mid-March, which created an unseasonable gap not rectified until May. This gap may have been created by lower demand for West Coast shipments as a result of the Chinese New Year.
   “Recovering from overcapacity and low rates, the industry’s balancing act is well-underway, while carriers, forwarders, brokers, tech giants and shippers are increasingly aiming to work smarter,” he added. “Better data movement will always lead to rapid fluctuations; it’s our mission to ensure that it also leads to more transparency.”
   Freightos says it has a database of 250 million rates between different destinations and is used by hundreds of forwarders.
   “Our global freight rate database is multi-modal, spanning ocean (FCL at various sizes and LCL at multiple weight breaks), air and trucking rates. With many forwarders having maintaining rates from numerous carriers and those rates being updated anywhere from monthly to daily, the number climbs pretty quickly,” explained Eytan Buchman, a marketing director at the company.