Making the right use of opportunities for low freight rates
In today’s globalized economy, efficient and cost-effective transportation solutions are critical for companies moving goods across international borders. Air and ocean freight are important modes of transport used to ship goods on a global scale. In this article, we take a look at current trends in air and ocean freight rates. It will be shown how companies can benefit from the current low freight rates with the help of the Kloepfel Group. It is worthwhile to become active now. Often, falling freight rates are passed on to customers only partially and with a delay – rising rates, on the other hand, are passed on immediately and in full.
Sea freight: Low rate level and windfall effects
The sea freight sector is currently experiencing an interesting price trend for customers – freight rates continue to stagnate or fall depending on the trade lane. Last year, sea freight rates were many times higher than today.
One particular aspect that stands out here is a certain deadweight effect that can be observed in the market. While many carriers have offered generous discounts to their customers, they have often not passed on the full benefit of low freight rates. For example, if the rate decline in a period is 30 percent and the forwarder only passes on 20 percent, there is a difference that many a forwarder is happy to “take.” Consequently, if the customer is not well informed about what is happening in the market, he might buy at inflated prices while believing that he has benefited from discounts on freight rates compared to last year.
This deceptive situation highlights the added value of working with the Kloepfel Group, which can use its expertise to ensure that the customer benefits from what are actually lower market prices.
Air freight: falling rates and overcapacities
In the air freight sector, the decline in rates is continuing. Weak demand for cargo space has led to a situation where there is an overhang of available capacity. This is due to a number of factors, including restocking during the pandemic, which led to a sharp increase in demand for air freight services during this period. Companies that relied on air freight due to supply shortages have since begun to switch more to ocean freight, leading to a reduction in air freight rates. The fact that a large proportion of global air freight is transported in passenger aircraft also plays an important role. With the gradual normalization of passenger numbers, more cargo space is available again.
Another aspect is that forwarders are currently not getting their longer-term quotas, which they concluded with the airlines at the beginning of the year at what are currently high prices, filled. This means that the agreement to deliver a certain amount of airfreight to the airline within a certain period of time is partly not being fulfilled. However, the price for the agreed quota must be paid. The experts of the Kloepfel Group have noticed in current projects that a kind of “price war” has developed for the scarce commodity air freight.
A tender could use this situation to its advantage, as other forwarders are also facing a sharp drop in demand and often offer these free capacities at a lower price than planned. This situation opens up a favorable time for purchasing air freight services.
Advantages of the cooperation with the Kloepfel Group
In view of these complex developments in the freight market, the question arises as to how companies can optimize their freight costs and benefit from the current market conditions. This is where the Kloepfel Group comes in. Working closely with Kloepfel’s consultants offers companies a number of advantages.
For example, it is possible to benefit from current developments in air and sea freight. At the same time, with Kloepfel’s support, the challenges of the ever-changing freight market can be met. The Kloepfel Group’s expertise and commitment help companies to optimize their freight costs and make their global supply chains more efficient.
Air and sea freight rates are currently experiencing complex changes due to factors such as overcapacity, weak demand, and price fluctuations. Companies, especially those with internationally structured supply chains, are faced with the challenge of finding optimal transportation solutions in this scenario.
Do you suspect that you are purchasing your freight capacity too expensively? Then contact us and benefit from top-notch solutions through our consultants to optimize your air and sea freight rates.
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