Port Strikes, Continued Volatility Impact Ocean Freight in Q4

Continued volatility in ocean freight rates and port strikes are key takeaways impacting Q4, according to a recent Colliers report.

“Inventory is a fact of life for any manufacturer, distributor, or retailer, but if it is not managed effectively, it will erode a company’s profitability. For example, if a company has too much inventory it becomes ‘capital that does not work,’ consuming valuable square footage and ROI from alternative investments. If a company has too little inventory, it will lead to inventory stockouts and unfilled orders, resulting in lost revenue and market share,” according to the Colliers report.

Key takeaways:

• The International Longshoremen’s Association, representing dock workers at East and Gulf Coast ports, and the United States Maritime Alliance, representing terminal operators and ocean carriers at said ports, reached a tentative agreement on wages, extending the Master Contract until Jan. 15, 2025.
• Inventory optimization requires a multi-pronged approach. If a company has too little inventory, it will lead to inventory stockouts and unfilled orders, resulting in lost revenue and market share. To avoid these pitfalls, companies need to implement four business disciplines, which will result in a successful inventory management program.
• Ocean container rates have declined by 42% since August, primarily due to overcapacity, the anticipation of a potential U.S. East Coast dockworker strike and weakened demand.
• All nine major U.S. ports experienced a year-over-year increase in TEU volumes.
• The average salary for a warehouse associate has decreased by 1.2% compared to the previous quarter.
• Drayage and intermodal service rates were mixed amongst different markets. No significant price change occurred in the parcel and air freight markets. Overall, ocean container rates decreased by 42% on average since early August.