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A Balanced Approach to Ocean Shipping

Several major steamship lines have opined recently that the market conditions are improving for carriers primarily due to a current positive trend in increased booking demand relative to capacity supply. The lines are keenly focused on rate escalation that is intended to turn a prolonged period of losses into profitable financial results.

While some lines may be declaring victory, ocean shipping is still in a period of transition. The market is less than a year removed from the Hanjin liquidation, which has had a ripple effect across many shipping lanes, especially those between Asia and North America. The large volume of container capacity must be reabsorbed into the market, which in itself creates a certain amount of volatility.

Is there enough data to declare a trend? We do not think so. We could be seeing these increased volumes from shippers making a concerted effort to move their containers prior to anticipated rate increases that generally come in May. Clearly, first quarter performance has improved significantly for some vessel operators, but it is too early to call this a trend.

What does this mean for the everyday importer and exporter? We recognize the temptation is to shop the market during periods of rate escalation. However, our direction has traditionally been to maintain close alignment with your International Freight Forwarder partner to achieve consistent performance during periods of volatility. Align yourself with a partner that:

  • Acts as your eyes and ears in the marketplace
  • Positions you properly and adroitly in your specific operating lanes
  • Balances its approach to rates, service and compliance
  • Knows your business model, as well as the goals of your organization related to global commerce

Changing providers frequently may save you a few dollars in the short term, but this strategy may cost you in the long run in terms of lower service levels, along with potential compliance issues. With U.S. Customs and Border Protection (CBP) enforcement at an all-time high, having a partner that provides independent validation and verification of your compliance protocols may very well create savings that far exceeds the few dollars you saved.

As part of its Enterprise Logistics offering, Transportation Insight provides international logistics solutions and compliance assessment services to North American importers and exporters. Connected to a best-in-class multimodal domestic transportation network with a class-leading technology stack, Transportation Insight clients enjoy end-to-end supply chain visibility from overseas ports to their customer’s door.

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