Over the past five years, statistics have shown an unprofitable side of the container-shipping industry. These trends appear to continue in 2015, as ocean cargo has many stiff challenges to face in order for carriers to remain profitable.
Factors Affecting Poor Performance in the Ocean Cargo Industry
Those who are in the ocean cargo industry face stiff challenges. One of these is the slow and spotty recovery in the industry from the global financial crisis. As corporations continue to try to control costs, they are looking for the most affordable shipping options, looking to cut cargo costs whenever possible. Add to this the fact that the ocean cargo industry has falsely foreshadowed a continued rise in demand. When the industry was going strong, leaders and planners extrapolated continued prosperity, and that has not been the case. Shipping lines routinely fail to understand the value received by customers, charging based on their costs alone when shippers would be willing to pay more for the value offered. This cuts into the profitability significantly, when carriers offer low spot freight rates as a result.
Carrier Reliability Improving In Spite of Challenges
In spite of these challenges, one area where the ocean cargo industry is seeing improvements is in the reliability of liner
schedules, according to Drewry Maritime Research. In May, the industry reported the four consecutive month of schedule reliability improvement, meaning more liners were on time than in prior months. What does this mean? For shippers, improved reliability combined with low spot freight rates means better profitability. However, this imbalance is not sustainable, and the likelihood of carriers looking to correct it through void sailings in the near future is high.