News / Ocean carriers the 'outright financial winners' in a year of unpredictability

© Rattana Rueangha

A year of unpredictability has led to substantial increases in both ocean and air freight rates, according to today’s report from Transport Intelligence (Ti), and complicated market factors are making future trends hard to predict.  

Ocean freight rates remain elevated – 117.6 points above January – and are not expected to return to pre-crisis levels any time soon, according to Ti data.  

Indeed, chief analyst at Xeneta Peter Sand told The Loadstar Podcast the “clear outright financial winners” this year had been ocean carriers. 

“They went from a disastrous outlook, with loss-making freight rates, to a dream outlook, with subsequent massively high freight rates,” he explained. 

Further, the Ti Market Sentiment Index reveals that, globally, most respondents anticipate a slight overall increase in rates for Q4. 

“The sharp market correction in terms of freight rates does seem a little further away,” added Ti, noting that the market had “found some equilibrium”, which “could keep rates relatively stable in the coming quarters”.  

Its data showed that global headhaul rates in November fell by 5.6 points, compared with October, continuing a downward trend from the summer peaks,  and quarter on quarter, average headhaul rates have fallen 54.6 points.  

The analytics company explained that this drop was a result of improved supply chain dynamics and shifting demand patterns. 

On the supply side, global shipping capacity grew 4.9% in Q3, with the fleet showing minimal idling, as the ships that once sailed through the Suez Canal are working harder. 

“The overcapacity boot has again failed to drop,” Ti said. 

It highlighted that the number of new vessel deliveries and low scrappage suggests “fleet rationalisation may be in store if demand dips”, but added that many carriers were still feeling the need to add new capacity “in order to resist the deterioration of their position in the marketplace” – suggesting that the liners remain bullish on the demand outlook.  

Indeed, 2024 has so far been a year of steady growth for demand, according to Ti. Global container volumes rose 8.3% year on year in Q3, with North America leading the charge with an 18.2% increase.  

But while North American demand remains strong, European import and export activity has been more subdued, weighed down by the struggles of key European economies. 

Meanwhile, air freight at a global level has reached “an unusual place”, reports Ti.

“Just comparing past performance of the market with the situation today does not fully explain the dynamics of the sector. Although the overall level of demand in the market appears strong, this disguises wide variations on different routes,” the analyst explained. 

This year, it said, air freight has been “a beneficiary of uncertainty” and global air freight rates have been on an upward trend.  

In Q3, global headhaul rates increased by an average of 5.9% month on month, while backhaul rates saw a smaller rise, of 3.7%. Headhaul rates rose more significantly quarter on quarter, with an 8.8% increase, compared with a modest 2.7% rise for backhaul. YoY, headhaul rates rose 4.6%, contrasting with a 3.2% decline in backhaul rates. 

But Ti commented: “There are a number of often quite extreme factors driving demand in airfreight, and just because there seem to be quite satisfactory growth rates overall, this does not mean the market is stable.” 

It added that the medium- to long-term impact of EU and US tariffs on Asian imports complicated predictions of air freight rate trends, but Ti’s sentiment index on global airfreight rates reveals most respondents this quarter expect rates to increase slightly.