News / Lower freight rates means lower prices for consumers, says new survey

Photo: Freightos

Freightos’ latest SMEs survey suggests consumers should start to feel their purses swelling amid declining freight rates and a return to supply chain ‘normalisation’.

Data collated from the 500 SMEs surveyed by the online freight platform indicated that lower-than-expected freight costs have had a macro-economic impact, with some 25% reducing product prices and still achieving a 15% bump in margins.

Head of research Judah Levine told The Loadstar: “Rates have fallen significantly, having a pronounced impact on SMEs, which are almost entirely exposed to the spot market.

“When we asked if falling rates had led to a reduction in pricing, more than a quarter said it had, while others said that although they had not yet been able to reduce prices, they had seen an improvement in profitability.”

And the survey found consumer demand patterns have altered significantly over the past 12 months, with 57% of respondents noting a decrease and Mr Levine suggesting it was back to around 2019 levels.

At the half-way point in the year, carriers and shippers are assessing the potential for a peak season and, for many, the picture looks bleak, most carriers believing the first quarter, although poor, will end up as their best.

But there are suggestions of a late peak, which tallies with survey results that suggest just half of SMEs are planning to increase their importing activity in the near future.

“It’s hard to say whether we’ll see a peak, but there are always two factors that will determine this, inventories and consumer demand,” said Mr Levine, “so those retailers with a reasonable inventory can still have a decent peak. Reports from Adidas and Nike are that they’re struggling with excess inventory, while Target has said it is entering a restocking cycle.

“Obviously for us to see any peak it takes more than Target to move the needle, but if enough importers are entering their restocking cycle, we should see this felt more broadly across the supply chain.”