Last week, a customer called with a fairly normal request: predict how shipping rates will change this year, so he could give one of his customers a quote for an upcoming order “delivered duty paid” (DDP). In other words, he needed help estimating what the shipping costs would be between now and November, because his customer probably wouldn’t place the order right away, and he (the seller) would be responsible for the full shipping costs, which can vary quite a lot during the course of a year.
In a “normal” year we could give him a good idea of what to expect between now and November. But this year, like pretty much every year since the pandemic, hasn’t been normal.
Last year, in 2023, was the era of the “shipper’s revenge.” The world was still recovering from excess inventory after COVID, and low demand led to lower rates, which was great for shippers, but carriers suffered and were sometimes even operating at a loss.
This led to lower supply, as carriers weren’t booking sailings or were skipping ports, so prices began to creep up again.
But so far this year, we’ve seen a different trend. Leading up to May, there was a jump of nearly $1,000 for the average container from Asia to the Eastern United States, and it wasn’t just a fluke – this increase has stuck around. Leading up to May 15th, 2024, based on carrier general rate increase (GRI) filings, there were going to be additional price increases.
And sure enough, the May 15th increase was $1,000. The June 1st increase is expected to be another $1,000.
How Will Prices Change for the Rest of the Year?
Last year, prices were less than half of what we’re currently seeing for a typical shipment from Asia to the East Coast of the United States. With increased demand – and even a container shortage – power has shifted back to the ocean carriers, and prices will likely continue to increase. We expect that they will continue to increase throughout the summer; not as high as they were during COVID, but still quite high.
By October or November, rates will probably plateau; following by a small drop early next year. This means that for the rest of 2024, availability will be an issue, with rollovers, where carriers shift containers from one vessel to another due to overbooking, becoming fairly common. This will impact scheduling and delivery times; so planning ahead will be even more important than “normal” years.
Sellers who typically price their products DDP may want to consider quoting differently, or at least build in a good buffer to ensure you’re not losing a ton of money on shipping when it comes time to deliver.
Regardless, anyone who needs to ship to keep their business running should ensure they’re working with a strategic freight forwarding partner who can help them navigate the expected price increases, helping make informed decisions about when to cut costs and when to invest. This way, you can keep your business running smoothly despite increased shipping costs.
