Press Exclusive
Freight in 2016: A Data Recap

Global trade in 2016 was, for lack of a better word, sluggish. Import volumes dipped, as did global container throughput. But flat-lines (or slightly dipping lines) in global trade were accompanied by radical shifts in freight rate pricing.

Better freight data availability and improved logistics technology systems means that information movement is far faster. Our 2016 freight data paints a picture of these rapid changes, together with ongoing shifts between air and ocean shipping, industry pricing opacity and swaths of freight customers paying year-round peak season rates.

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. Better data movement will always lead to rapid fluctuations; it’s our missions to ensure that it also leads to more transparency.

Zvi Schreiber
CEO, Freightos
January 2017

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The charts below leverage data from both Freightos AcceleRate™ freight rate management’ users and from the Freightos Marketplace, with the permission of the forwarders and shippers who own the underlying data sets’* . Usage is permitted with attribution to Freightos.

Christmas (prices) came early this year.

Greater China-US 40’ ocean container prices (blended across multiple origins/destinations/carriers)

Our Take

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. Lacking increased tolerance for pricing spikes, anticipated October and November spikes were not forthcoming.

Transparent Pricing? Not yet.

Range of Carrier Prices 40’ CNSHA->USLGB, Single Day in December 2016

Our Take

Opacity and pricing fluidity continues to plague the industry. Divergence in pricing on this route across 13 top-20 carriers show an average rate of $1506 but a variance of more than 30%. The result is that one forwarder can pay 30%+ more than others on the spot market, with an even higher range of prices paid by the shipper.

Or…transparent pricing when prices are high

Range of Carrier Prices 40’ from Greater-China to US (10% and 90% Percentiles)

Our Take

Looking at the 10th and 90th percentile of Greater China-US shipping prices, the 90th percentile’s prices are less impacted by external factors or seasonality, paying peak prices year-long. Better spot market negotiators get cheaper rates but are far more exposed to external factors, like Hanjin’s bankruptcy, where carriers adapt to supply and demand changes. The graph on the right shows price range fluctuations, with wider gaps during lull seasons. The wide range in prices, further amplified downstream, are a telltale sign of opacity.

Ports Seasonality

Range of 40′ import prices across US ports by coast

Our Take

US imports at ports on both coasts tracked similar trends during 2016. 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. Cathy Roberson of Logistics Trends & Insights suggested that sluggish US economic growth in Q1 may have played a role, as well as infrastructure limitations on the East Coast.

West Coast Rules (and what happened to the Panama Canal?)

Inbound TEUs to major US ports

Our Take

This analysis includes pricing from key US ports that report on monthly inbound loaded TEUs. West Coast ports have recovered from the West Coast strikes, maintaining a steady balance of 60% of inbound TEUs. Interestingly, it does not appear that an expanded Panama Canal has yet to impact US imports significantly, likely due to pending infrastructure improvements and ocean capacity limitations on the route.

Taking flight instead of taking a dip

Percentage of spot quotes that are air (as total of air and ocean quotes across freight rate management users)

Our Take

Air and ocean have had an uneasy relationship as mode shifts one way and the other. Low fuel prices and increasingly reliable ocean freight are spurring more maritime movements while slow economic growth pushes companies to cut costs. Air freight did rise significantly in September, likely as aftershocks to the Hanjin bankruptcy but the pre-Christmas peak season was anemic. The relatively high air freight percentages may persist; according to IATA, October’s air freight growth rate was the highest growth in 18 months.

Incoterm Frequency

Common incoterms for major Western forwarders

Our Take

The vast majority of Western shippers import FOB or EXW. While door-to-door shipments will likely grow to be more important as Western shippers gain visibility into Asian trucking and vice versa, most shipments still follow the traditional incoterms with shipping costs split between consignor and consignee.

Download the underlying data and brief now.

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