Annual Review & Outlook 2013: North Atlantic Alliance Association

Joseph T. SaggeseThe high tide of containerized U.S. exports in ocean shipping will continue to ebb in 2013. Overcapacity is returning to levels of the last decade, when ocean freight rates plummeted to record lows. The economic weakness in Europe and the U.S., coupled with a slowdown in China’s manufacturing, create a chorus of bad news for U.S. exports that already started to decline in 2012, and will create a drag certainly through 2013 and possibly into 2014.

We have seen this play before — the forces of supply and demand at work creating deep discounts in ocean shipping. Export freight rate levels have not been this low in many years. Reduced export levels threaten an already cash-strapped (post recession) industry and will do nothing to help move a weakened economy toward recovery.

The reasons for the plummeting rate levels are varied, but the end-result remains the same. The loss of revenue will only lead to cost-cutting, reduced jobs, consolidation of services, inefficient logistics and costly solutions. Diminished investments in infrastructure will not reverse export levels or provide incentive for economic recovery. The resulting loss in the quality of goods and service will be borne by the consumer.

The ocean transportation intermediary remains a viable organization with the ability to provide its customers a way to navigate these turbulent waters. NVOs will again serve as a vital lynch pin for international shipping, offering effective logistics solutions for shippers and carriers alike. Not until we see increases in export levels and resulting increase in freight rates will the tide turn.

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