Precisely one year ago, shipping a 40-foot container from eastern China to the west coast of the US at short notice would have cost €9,000. Today, that price has plummeted to under €1,500. The same is true for almost every port in Southeast Asia, where freight forwarders are touting prices below their traditional €1,400 benchmark for FEUs to northern Europe.
For Global Mobility professionals, responsible for coordinating the transportation of household effects of employees, this is great news. But will prices continue to fall, settle, or rise rapidly in 2023? Here’s everything you need to know, plus why now is precisely the right time to secure shipping and storage capacity for your international moves.
What’s the consensus on cost?
Plenty of professionals say rates will remain flat due to a poor economic outlook, dampened demand for consumer goods, and an overzealous rush to expand ocean-going capacity by launching ever-larger ships. But unlike air freight that’s based on weight (where 50% of all cargo travels in the bellies of scheduled passenger planes), sea shipments are slower and operate within slighter margins. They use technology to maximise value from volume: sometimes that means operators constrict capacity to revitalise their rates and revenue. That squeeze on supply may be imminent, and we could see prices rise in coming days and weeks.
Container ships use sophisticated planning systems and software to call en route at strings of ports. Operators often skip points of call in what are known as void or blank sailings and sometimes cancel legs or entire strings. The effect is the same as blocking out tickets on a low-cost airline—the remaining seats and spaces leap in price. In 2022 the number of cancelled or skipped shipments between Asia, the US and Europe increased by 40% on the previous year.
So, has that tightening of supply translated directly to the price GM professionals are quoted? In January 2023 goods shipped dropped 5% from the year before. But freight rates nudged up by 2.1% in the same month. This could well be the direction of travel as we pass the bottom on the market for rates.
Plan for better pricing
Santa Fe’s Chief Operations Officer of Move, James Gooding said “Often assignees dictate exactly when and where their things need to be moved. So, you pay the price on the day. For those who can better predict and plan, increased availability and sharply lower costs are a genuine opportunity right now. The same is true for our warehousing and storage availability”.
One of the biggest shipping groups, Maersk, predicts their operating profit could be between €2 and €5 billion for 2023 (compared to €31 billion last year). Many container operations are trying to add value by offering more data or flexibility—but as a huge number of new vessels are launched, many of them will remain tied up at port to suppress supply and keep prices high.
To support the rapidly rising number of international assignments, we’ve invested in extra capacity for value-add services. These include cost-effective immigration support, backed by local expertise—and the most efficient expenses and compensation management system available anywhere. These added efficiencies, plus bargain basement freight rates, mean now is a great time for international teams to be on the move.
Get in touch today to take advantage of the short-term lull in freight rates and price efficiencies across the board. There’s a simple form, and a helpful expert will be in touch with ideas on the best rates we’ve seen for a long time—and possibly will for a while.