Sea freight rates halve in 20 years

London, UK: Container freight rates have fallen by over half in the past 20 years after inflation is taken into account, according to Alphaliner.

Average nominal freight rates measured by the China Containerised Freight Index have declined by more than 20% since the beginning of 1998 with inflation-adjusted freight rates showing and even larger fall.

“Although shippers have been quick to raise their objections against the carriers’ recent attempts to impose ‘emergency’ bunker surcharges, a reaction toward steadily increasing fuel prices, few have acknowledged the significant savings on freight rates they have enjoyed over the years,” Alphaliner said.

Fuel costs, which accounted for about 8% of carriers’ operating costs in 1998, now make up 15% of total operating costs, Alphaliner said. “For context, this number had reached a high of about 26% in 2011, when bunker cost were unusually high for an extended period,” it said.

“Since then, carriers have been able to mitigate part of the increases through cost-saving initiatives, including the use of larger ships, slow steaming, and headcount reductions, as well as synergies from consolidation and from the formation of alliances.”

Most savings from operational and organisational efficiencies in the past two decades have mostly been passed on to shippers in the form of lower freight rates, in nominal and in real terms.

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