From understocked and extremely expensive to balanced and more favorable to shippers, the ocean freight market has shifted in the past six months, Drewry says in his latest update.

"But what are the key aspects that shippers/BCOs should consider now to take advantage of their improved bargaining power?"

Drewry has listed four options for beneficial owners to understand the ocean freight rate scenario for 2023.

“With spot rates on certain routes to and from Asia now 40 percent lower than contract rates, many exporters and importers are considering moving away from contracts and instead switching to spot rates with freight forwarders/NVOCCs. interim contract to step.

“The pros and cons of such decisions depend on the circumstances of the shipper, including contractual obligations and penalty clauses. Drewry's advice in most cases is that shipping isn't just about cost, and it's better to turn to existing carriers. to request a reduction in contract rates rather than harm existing business relationships and service levels.

“For smaller shippers, who suffered the most and in many cases were unable to get sufficient capacity from ocean carriers at fixed rates during the shipping boom, the spot market makes more sense. But it requires more staff, more time to make ad hoc or arrangements to be corrected, and the realization that spot arrangements provide less support from carriers or NVOCCs when things go wrong (for example, the impact of the increasing number of "cancelled sailings")."

“Unlike previous oce offers, when our advice was to start bidding as early as possible to ensure shippers secure (scarce) capacity, this time the recommended strategy is to start bidding at the normal time (or after a contract extension) . to take advantage of the weakening market and falling contract rates."

As the market moves into overcapacity, the pendulum will swing again and shippers will be able to revise their contracts and request (within reasonable limits) more time off, longer payment terms and higher service level commitments from carriers, the update added.

Drewry also has a warning to shippers: "It will be tempting — but inadvisable — for shippers to 'seek revenge' against previous carriers and NVOCCs and drop them."

Noting that there are now only nine global ocean carriers, "most medium and large BCOs will have to operate with five or more of them in the near future." Restoring business relationships will be a key consideration in 2023, the report said.