News / 'Feeding frenzy' over low rates must end, say forwarders

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Forwarders need to pull out of the ‘race-to-the-bottom’ on ocean rates or risk losing customers, margins and livelihoods.

One source at a major international forwarding outfit this week told The Loadstar forwarders should not be happy with the rapid decline in rates, and those that kept pushing them lower were “cutting their own throats”.

“For the extra $50 you might get, you are likely to lose when the customer gives their booking to someone even lower,” the source said. “The bottom line is that low, low rates equal little or no margin for forwarders. None of us should be happy about this, or be adding to the pain.

“This is easier said than done, of course, when bidding on tenders becomes an insane gambling exercise of not wanting to be outbid.”

Addressing investors during an earnings call last week, Maersk CEO Vincent Clerc warned of a “dire 2024” if there was no uptick in spot rates over the final months of the year.

Responding on LinkedIn, Rhenus’s head of ocean freight for the Americas, Stephanie Loomis, described Mr Clerc’s comments as “comical”, claiming it was an apparent tendency by Maersk to make under-market quotes through co-loaders’ rate sheets, “week after week”.

She added: “Maybe they [Maersk] should stop undercutting this already insanely low spot market.”

Data for the second week of November, made available to The Loadstar, indicated that Maersk was offering rates of circa-$500 per teu and $800 per feu on Ningbo-Hamburg routings against averages for the week of $600 and $950.

Acknowledging carriers set the rates and could reject bids from forwarders, the source said the forwarding community needed take some responsibility.

They added: “Whether it was the pressure from the newly involved C-suite demanding lowest possible rate offers or procurement directors’ egos wanting to ‘give it back’ to the carriers, even bids with unachievable and unsustainable offers were scoffed at.

“No one, it seemed, wanted to commit volumes without a long and seemingly endless fight. We participated in one bid where the shipper ended up having eight extensions. Madness. We had told him, after his third gyration, rates were not going to go any lower. To no avail. I have personally never seen a tender season like last year, for the importers it was a complete feeding frenzy.

“Let’s hope that is finally over.”