Drewry: Pre-and post-carriage costs become focus

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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.

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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.

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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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