High ocean freight rates in December foreshadow expensive 2019
Edwin Lopez | January 07, 2019
Downturns are expected at the end of the year, as freight providers normalize their supply and demand fundamentals after peak season and before the start of the new year.
Although spot rates dropped in December 2018 compared to November, the figures remain far above what has been previously considered normal. If December in any way reflects one of the lowest price points for freight in the shipping cycle, as it has in previous years, the high rates this year bode poorly for shippers' budgets. Higher December rates this year may be attributed to various causes, from an outsized demand for imports, carriers adjusting their freight networks and variations in crude oil costs. It is not the first year spot rates in December are higher than yearly medians: In 2016, spot rates for shipping to the East Coast also failed to drop significantly. That year, ocean carriers were recovering from a supply shock after Hanjin Shipping, then the eighth largest carrier, declared bankruptcy.