Another tough year for the shipping industry has passed. If you are one of the regular readers of our blog, you might recall my article from the first month of 2012, where I expressed my thoughts on what was going to happen in the year that was ahead of us – and unfortunately I was right. Except, one of the main points was not allowed to happen. No carriers went out of business. Well, the main reason for that are the external factors – where certain carriers got financial support either from a government or a government related private sector. I believe that at a certain point in business, you either need to cut that arm off or the infection will just spread to the entire body. Instead of cutting off the arm in 2012, we lived “with an infected body” where services got suspended, companies downsized and continued to let go off workers, while carriers tried to increase the rates with the reasoning of “sustaining the level of service”. Of course I wouldn’t like to see any company/carrier go out of business, but this way we all just struggle with it in the short term and the long run.
Now 2013 is officially upon us, so are you ready for the blue skies and shiny days? Don’t get your hopes up, buddy. We still have struggling economies all around the globe. I’m sorry to tell you this, but this year will not be better than last year. This year we will again see unnaturally filled vessels (by either idling vessels, slow steaming or cutting space on purpose etc). We will again see General Rate Increases that will be implemented only for the purpose of ‘not letting the rates decrease further’. And it will again be very tough for everyone to calculate their actual shipping cost since the entire industry will only have 15-30 day rate validity– especially for imports from China.
I think ocean freight wise, US Exports will be more stable, because I don’t think there is further room to drop the rates, and considering the market conditions we will not see a jump in demand. What we are mostly going to see is, whenever carriers see an opportunity to increase the rates they will follow through, then some of their competition will oppose, causing minor chaos and then the carrier who initially increased the rate will bring their rate back down to where they started. So again this will create extra struggling and fighting among the shipper/carrier/NVOCC triangle.
Being part of a company that continued to grow in 2012, I am hopeful despite all the facts above, that the companies that are flexible, service oriented and follow the market trends well, will survive another challenging year.
