Transportation & Logistics Analysis

Shipping companies adopt a new pricing logic

October 20 2021

Freight rates stayed generally stable in September at high levels. But their progression over the last 18 months shows that there has been a radical change in shipping company thinking on freight rates.

One thing is clear in this post-summer holiday period: shippers are having to pay a lot more for services which have deteriorated…Some are able to soak up the freight rate increases in return for greater visibility and rapid access to empty containers. Others, on the other hand, are already throwing in the sponge after finding themselves unable to pass on increases which have left their products unable to compete on their normal markets. The inflation affecting transport costs which we talked about at the start of the year has become a tangible reality, which is aggravating the inflation already affecting commodity prices.

The rates recorded by Upply in September 2021 show that they are stabilising at a high level on Asia-Europe routes and continuing to rise on North Europe-Asia and North Europe-US East Coast routes. In addition, we note that the rating policy of shipping companies is undergoing profound changes.

To try to get a better idea of what is currently happening, we decided to estimate the share-out of shipboard space by freight rate type before and after the start of the Covid-19 pandemic.

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Expert in Ocean shipping for 25 years, Jerome puts all his knowledge of the industry to contribution for Upply. Ship captain at heart, he has written the English-French Lexicon of Containerized Shipping (Paris: CELSE, 2001).
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