With Transportation Carriers Restoring Capacity, Freight Rate Inflation Shows Signs of Abating
NEWARK, N.J., Aug. 2 /PRNewswire/ -- More than halfway into a year marked by rate and volume spikes for all types of freight transportation, the surge in prices may be running out of steam. Capacity is increasing and, for container shipping in particular, the signs are pointing toward equilibrium in supply and demand.
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So far this year, limited vessel capacity and moves by retailers and manufacturers to replenish depleted inventories have helped push pricing for ocean shipping back up near the levels of 2008, before the downturn sent rates to the lowest levels in recent history. But with only 2 percent of the world's container-ship capacity now idle (the lowest level since Nov 2008), the balance appears to be tilting back to shippers.
"So much is going to depend on the carriers' ability to control their capacity," said Steve Horton of Horton Global Strategies. "That's the real key to whether rates stabilize where they are now or whether there's some softening in the market."
Ocean shipping rates have flattened out in recent weeks, according to several industry measures, and that may presage a tougher market for price increases for U.S. trucking companies that are seeking to recover from the weak demand of the past two years.
In this week's Cover Story, The Journal of Commerce examines the supply-demand outlook and what it means for freight pricing as the transportation industry heads into the fall peak-shipping season, which for transportation carriers is the most crucial part of the year.
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SOURCE The Journal of Commerce
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