Horton Global Strategies

Horton Global Strategies

2010 will be another volatile year for ocean freight rates. In my 25-plus years in this business, I have never seen such constant adjustments of rates. This is mainly because the global supply of vessels and equipment is seriously above current demand. Even as carriers worldwide have taken out capacity to try to equalize supply and demand, the world economy is not catching up. 

At the same time, ocean carriers, in their effort to keep market share in the first half of 2009, reduced rates to ridiculously low levels on virtually every trade lane worldwide. Those lower rates led to significant losses by the carriers. Many carriers are losing at least $1 million PER DAY. 

This cannot continue, so the carriers in 2010 will continue to announce general rate increases, surcharges…anything they can do to recover some revenue. In the past, the carriers have been their own worst enemies regarding rate stability; it only takes one or two mavericks to destabilize rates.

Carriers this year must have more resolve in recovering revenue, or some major players could go out of business.

The other wild card is that the carriers have a lot of excess capacity — both vessels and equipment — laid up. If a particular trade lane becomes full, will the carriers in that lane keep capacity out and raise rates or put in more capacity to relieve their burden of laid-up vessels?