Freight rates plummeted by 70%! How to survive?

Freight rates plummet: the inevitable result of the imbalance between market supply and demand

The weak global trade demand is the direct cause of the sharp drop in freight rates. Although carriers have tried to slow the downward trend in freight rates after the traditional peak season in July, the data has ruthlessly revealed the weakness in market demand. At the same time, the delivery of a large number of new ships has further exacerbated the imbalance between market supply and demand, making it difficult for freight rates to be effectively supported. Linerlytica's forecast clearly pointed out that by June next year, container freight rates are expected to fall by more than 70%. At the current freight futures price, it is expected that the decline will continue in the next 12 months, and it is expected that there will be no rebound at the end of this year, and the freight rate increase after the Lunar New Year this year will not be repeated in 2025.

Double pressure on the freight market

Although the sharp drop in freight rates has reduced the costs of freight forwarding and logistics companies, it has also had a huge impact on the industry's profitability. The income of freight forwarders is directly affected by freight rates and cargo volume. The sharp drop in freight rates and weak demand have reduced the profit margins of companies and even threatened their survival.

In addition, the drop in freight rates has also intensified market competition, which may trigger vicious competition such as price wars, further compressing the survival space of freight forwarders. So where is the growth point of the freight forwarding and logistics industry? Where does the profit source come from?

Industrial belts going overseas: logistics chains usher in new opportunities

Under the complex global political and economic environment, Chinese companies are seeking new growth points in the international market, and the industrial belt strategy of going overseas has become an important way. Large companies can quickly respond to demand and reduce costs such as tariffs through international industrial belts; small and medium-sized enterprise industrial belts, as a supplement to the globalization of large companies, can consolidate their overseas market position and reduce localization resistance.

In the context of industrial belts going overseas, the logistics chain has also ushered in new development opportunities. The 19th China International Freight Industry Chain Expo (hereinafter referred to as the Cargo Expo) will be held in Ningbo from November 26 to 29 in 2024. It is a positive response to this trend. The Cargo Expo is themed "Industrial belts go overseas, logistics chains escort", bringing together freight forwarders, cargo owners, port parks, shipping companies and other upstream and downstream enterprises in the freight industry chain from 110 cities across the country and more than 80 countries around the world. Focusing on the industry, exploring business opportunities, and jointly helping the industrial belts go overseas and drawing a blueprint for the logistics chain escort!

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