WHILE recent reports suggest that shipping container rates are beginning to show signs of easing, CEO of freight forwarding company Verus Global and founder of Fickle Technologies Jackson Meyer believes otherwise.
Last week, on the busy Shanghai-to-Los Angeles trade route, the rate for a 40-foot container sank by almost US$1000 to US$11,173 – an 8.2% drop from the prior week, and the steepest weekly fall since March 2020.
Ocean freight remains globally 250% more expensive compared to pre-pandemic rates, along with air cargo rates. Additionally, shares of some of the world’s largest shipping container lines to smaller competitors have stumbled in recent days from record highs set in September.
“This is a traditional seasonal trend, it happens every year and is not unusual,” Mr Meyer said.
“Historically, rates tend to peak at this time of year, then decline slightly. While we saw a decline of 8.2%, rates are up 565% on certain trades.”
He said there are no new vessels entering the market, and the deployment of existing vessels is maxed.
“From a local perspective, Australia has no capacity to take on any new vessels due to port constraints,” Mr Meyer said.
“COVID-19 measures are hampering operations, and Victoria is under enough pressure as is, given the daily increase in positive cases. Businesses are struggling to maintain their operations from wharfage operations and servicing, with complete shifts having to go into isolation if there is a positive case.
“Our entire workforce is under the pump, we simply don’t have the resources to unpack these containers and vessels,” he said.
The products facing the biggest challenges at the moment are packaging, raw materials, furniture, promotional items and homewares. Currently, it’s costing some of Mr Meyer’s customers more to import a container, than the commercial value of the items in the container.
He has observed a shift in customer trends, with some of his customers opting to wait the shipping rate storm out, and not ship products out of the origin ports.
Others are using the tech solution developed by Mr Meyer’s company Fickle Technologies, which enables real time decision making and identifies areas of deficiency, such as price fluctuations – both international and local.
Launching the live automated software solution during the global pandemic, Mr Meyer was able to increase his sales by US$40 million without an increase in headcount.
“It’s imperative for them to find more efficient ways of doing business, and Fickle assists them with doing just that, in addition to monitoring all of these escalating costs and how they affect their products all the way through to an individual product level,” Mr Meyer said.