Drewry: Pre-and post-carriage costs become focus

ship in port

For US shippers, port-to-port spot container freight rates this year have only moved one way and that way was down. To be precise, our Hong Kong-Los Angeles Index did nudge up once in week 14, but the overall picture is that of steep decline: it started the year at $1,418 per 40ft and last week sat as low as $718 per 40ft, meaning it lost $700 or 49% of its value over the first 15 weeks of the year.

Our monthly rate benchmarks followed a very similar pattern: spot freight rates from Shanghai to Los Angeles lost $670 per 40ft (40%) and from Shanghai to New York they lost $760 per 40ft (28%) between the beginning of January and the end of March.


Strange then, that the intermodal “through rates”, which we started tracking in our Container Freight Rate Insight in January, do not follow suit: through rates from Shanghai to Chicago via LA-LB lost “only” $470 per 40ft (13%) while Shanghai to Toronto via New York lost “only” $570 per 40ft (16%).

Clearly in these turbulent times, the shipping lines have ample incentives to sell these intermodal arrangements: they not only provide more stable revenue streams that add more contribution to cover overheads compared to port-to-port shipments, but they also enable them to better control the equipment flows and thereby balance equipment flows at optimal cost.


But, as a shipper, you should ask yourself: could you be better off breaking the connection between the ocean and inland transportation parts, to take full advantage of keen pricing on the ocean part of intermodal moves?

Source: Drewry



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