During 2015 the US imported more container shipments than ever before, achieving an annual growth rate of 5.4 percent, according to JOC economist, Mario Moreno. Container imports reached record levels due to a strong dollar, increase consumer spending, and a significant decrease in the cost of ocean freight.
Although the US imported more containerized shipments than years past, the steady drop in ocean freight pricing and the new tonnage supply vastly out performing demand has caused the Trans Pacific lanes to have excess vessel capacity. The SCFI (Shanghai Containerized Freight Index), a reliable indicator of the average spot rates, was recently at historical lows. Since May of 2015, importers have seen the average shipping freight cost fall by over fifty percent.
Martin Dixon, head of research projects at Drewry, a London-based company that specializes in ocean freight market forecasting, explains, “We are forecasting that freight rates will continue to fall over the next two years. This will do little to improve profitability. This year is another one with excess supply.” Dixon estimated world container trade growth at 5% in 2016, well below the 8% additional freight capacity being injected into a market.
At Sempermed, we have done our best to manage the dropping freight charges and carrier agreements. We are working diligently to ensure our costs remain competitive with the current market.