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Recent developments in ocean freight indicate a pivotal moment for carriers as they push back against undercutting tactics and work towards rate restoration. The looming General Rate Increases (GRIs) for mid-December and January 1 on Asia-North Europe routes have become a focal point in this evolving narrative.

For the past few months, China-based forwarders have engaged in aggressive undercutting, challenging agreed rates with carriers to secure additional spot business. Carriers, eager to maintain market share, often discounted rates further, fueling a “race to the bottom” reminiscent of the industry’s past challenges. Extra insult is added to injury when the rates and service issues are accepted due to desperation, and the booking is canceled anyway. 

However, a reality check in the form of disappointing Q3 results and a bleak Q4 outlook has prompted carriers to reevaluate their approach. The massive blanking program, service diversions due to war risks, and increased demand ahead of Chinese New Year have allowed carriers to execute well-planned GRIs. The GRIs led to shippers competing for limited space, with rates witnessing a notable shift.

The industry is witnessing a recalibration of pricing dynamics, and shippers must adapt to this changing scenario. The increased demand before Lunar New Year could lead to the introduction of a peak season surcharge in January. Moreover, there are murmurs of the potential revival of “premium” surcharges, reminiscent of the supply/demand crunch of 2021 and early 2022.

The industry’s response to undercutting tactics and its ability to enforce GRIs reflect a turning point, emphasizing the need for shippers to stay informed and agile in their logistics strategies. As the tides shift, strategic adaptation will be the key to successfully navigating the dynamic waters of ocean freight. If you want to stay ahead of the curve as we move into 2024, contact your Zarach representative today for assistance.