Rate volatility keeps shippers on their toes

The Far East route has been a rollercoaster ride of highs and lows – but for Cargo Care Freight International it’s become the company’s biggest market, says CEO Roland Raath. And the stronger rand has made it even more attractive to South African importers. “This market climbed to dizzy heights in 2005 to 2007 before flattening at the end of 2008 and tumbling down in 2009 with a mild recovery into early 2010,” says Raath. “Market volatility as well as rate volatility means staying in touch with trends on a monthly rather than quarterly basis.” Over the past ten years fuel and bunker charges have added almost 40% to ocean and air rates while airfreight security costs further complicate the issue, says Raath. Which is why importers have struggled to get to grips with landing costs. “The traditional ocean freight peak season surcharge complicates the market as importers face a seasonal surcharge of as much as 20% of the freight rate. This spikes costs upwards towards August of each year and plays havoc with landing costs.” A regular and consistent importer should benefit from a consistent and set rate for the full year, says Raath. “But loyalty seems to carry no weight in the market – in particular around peak period.” While the downturn in volumes over the past 24 months recovered marginally in early 2010, this was short-lived, says Raath. “It’s evident that company fortunes lost over the past few years will take longer to recover – but thanks to intense sales initiatives the past 18 months have been record months for us.” The ocean freight market has slowed down, rates have softened and space is available while a fairly steady rate pattern has been evident for airfreight, although capacity is under pressure. The golden rule is never to take your eyes off the rates because they’re constantly on the move.