WHAT'S A "GOOD" OCEAN FREIGHT RATE?

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ABOUTXENETA

At Xeneta we believe there is an untapped potential for everyone in the industry, to systematically learn from our individual and collective efforts. We hold true that "if you cannot measure it, you cannot improve it". That’s why we think actionable metrics is the key to continuously evolve for every business, and ultimately the entire industry. Rethinking global logistics is the vision of Xeneta.

With international experience from the logistics industry, we have first-hand knowledge of the challenges related to high volatility and lack of transparency in the ocean freight market. By combining logistics background and information technology expertise, we found the solution to these challenges.

WE ARE TRANSFORMING GLOBAL LOGISTICS

ARE YOU PAYING THE RIGHT CONTAINER

FREIGHT RATES?

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A GOOD FREIGHT RATE IS A LOW ONE, ALTHOUGH YOUR CARRIER WILL SURELY DISAGREE. BUT TODAY’S WORLD OF OCEAN FREIGHTS AND TRADE LANES IS FAR MORE COMPLEX THAN IT USED TO BE WHERE BOTH SHIPPERS AND CARRIERS NEED TO FULLY UNDERSTAND THAT CHANGES ARE NECESSARY IN ORDER TO MOVE CONTAINER CARGO WORLDWIDE MUTUALLY PROFITABLY.

OCEAN FREIGHTS ARE A COMMODITY. SIMILAR TO GRAIN, CRUDE OIL, AND THE METALS TRADED ON THE LONDON METAL EXCHANGE, OCEAN FREIGHTS RISE AND FALL BASED ON SUPPLY AND DEMAND ISSUES.

WITH OCEAN FREIGHTS, THE SUPPLY & DEMAND ISSUE IS PRIMARILY CARGO VOLUME MEASURED AGAINST CONTAINER AND SHIP AVAILABILITY, PLUS BUNKER PRICE CHANGES, CURRENCY FLUCTUATIONS, AND INSURANCE SURCHARGES DUE TO PIRACY IN THE MAJOR TRADE LANES.

WHILE MOST OF THESE ARE ECONOMIC ISSUES THAT CAN BE EITHER FORECASTED OR HEDGED, GOVERNMENT SUPPORT OF FAILING CARRIERS SKEWS SUPPLY & DEMAND BY OFFERING BARGAIN-BASEMENT FREIGHT RATES DESIGNED MORE TO RAISE CASH THAN OPERATE A GOING CONCERN.

BEING THE RECIPIENT OF SUCH A RATE MAY BE ‘GOOD’ IN THE SHORT TERM, HOWEVER THE ‘GOOD’ DISAPPEARS IF THE SHIPPING LINE GOES UNDER AND THE REMAINING CARRIERS JACK UP THE RATES

ARE YOU PAYING THE RIGHT CONTAINER

FREIGHT RATES?

DISCOVER SAVINGS POTENTIAL IN REAL

TIME.

A ZERO-SUM GAME?

BENCHMARKING: IT’S ALL RELATIVE

WHILE MANY COMPANIES SHIP LARGE VOLUMES OF TEU'S GLOBALLY, THE EFFECT OF THIS VOLUME IS OFTEN DILUTED BY THE NEED TO SHIP A WIDE ARRAY OF PRODUCTS OVER AN EQUALLY LARGE NUMBER OF SHIPPING LANES AND OCEAN CARRIERS.

THERE HAVE BEEN SOME WORRISOME INDICATORS THAT THE CONTAINER BUSINESS IS NOW CONSIDERED A ZERO-SUM GAME WHERE OCEAN FREIGHT RATES AND SAILING TIMES ARE CONSIDERED BATTLEGROUNDS IN THE FIGHT FOR FREIGHT RATE SUPREMACY.

BUT AS SHIPPERS AND CARRIERS WORKED TOGETHER IN ORDER TO DEVELOP THE CONCEPT OF JUST-IN-TIME DELIVERIES, PERHAPS THE NEXT CONCEPT ADOPTED BY THE LOGISTICS WORLD SHOULD BE THAT OF BENCHMARKING, WHERE OCEAN FREIGHT RATES ARE COMPARED AND

OCEAN FREIGHTS ARE A COMMODITY. SIMILAR TO GRAIN, CRUDE OIL, AND THE METALS TRADED ON THE LONDON METAL EXCHANGE, OCEAN FREIGHTS RISE AND FALL BASED ON SUPPLY AND DEMAND ISSUES.

BENCHMARKING: IT’S ALL RELATIVE

BENCHMARKING ENABLES A SHIPPER TO ACCURATELY ANSWER THE MOST IMPORTANT QUESTIONS ASKED IN THE SHIPPING BUSINESS: “AM I PAYING THE RIGHT FREIGHT RATE? IS MY RATE COMPETITIVE?”

OCEAN FREIGHT BENCHMARKING IS MOST USEFUL FOR BOTH SHIPPERS AND CARRIERS; CARRIERS OFTEN NEED INDEPENDENT VERIFICATION THAT THE RATES REQUESTED BY THE SHIPPERS DO IN FACT EXIST IN ORDER FOR THE NEGOTIATIONS TO BE FINALIZED.

BENCHMARKING PROVIDES THE INFORMATION NECESSARY TO ANSWER THE QUESTION OF WHAT IS A ‘GOOD’ OCEAN FREIGHT RATE: A ‘GOOD’ RATE IS ONE WHICH IS LOWER, OR AT LEAST THE SAME, AS YOUR COMPETITORS.

BENCHMARKING: IT’S ALL RELATIVE

LEARN HOW XENETA CAN HELPYOU GET INSIGHT AND

INTELLIGENCE INTO YOUR GLOBAL OCEAN FREIGHT PRICES AND CHANGE YOUR LOGISTICS

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