Ocean Freight Procurement Intelligence
In this Ocean Freight procurement intelligence report, we have estimated the key cost components associated with the services. This includes the cost of cargo ships/mega-ships, fuel and surcharges, port, demurrage and detention charges, labor, customs clearance charges, terminal handling costs, insurance and ancillary charges. Containers are of vital importance in the shipping and ocean freight industry. Hence, fluctuations in container prices can impact the freight rates charged by shipping carriers for their services. Container rates might vary based on the kind and size of the container, the period of usage, and any additional services necessary. For ocean freight service providers that do not own their vessels but rather lease the containers, container charges can significantly influence overall shipping costs. For enterprises (or large corporate clients) that rely heavily on containerized transportation, the shipping cost increases notably.
Similarly, customs clearance costs are related to the process of clearing goods through customs. These expenses may include rates for taxes, customs inspections, document preparation, and customs duties. Custom clearance charges in the U.S. for shipments via ocean can range between USD 27 - 530. This can vary based on a number of factors like value of merchandise, harbor maintenance fees, import duties, etc.
Shipping a standard 20-foot container from India to the U.S. can range between USD 1,200 - 1,400 for a full container load (FCL). The costs for a 40-foot shipping container on the same route range from USD 1,600 to 1,800 for a full container load (FCL). The less-than-container load (LCL) cost ranges from USD 1,500 - 1,700 for 100kg/cm. It is important to consider that evaluating container shipping rates for half containers is more complex than determining a complete container’s cost. This is because space in an LCL cargo is often more expensive per foot than space in a full container. As a result, a full container is relatively cheaper than an LCL shipping. For this example, the port of loading (POL) has been considered in Mumbai and the port of discharge (POD) is in San Francisco.
Order your copy of the Ocean Freight category procurement intelligence report 2024-2030, published by Grand View Research, to get more details regarding day one, quick wins, portfolio analysis, key negotiation strategies of key suppliers, and low-cost/best-cost sourcing analysis
Operational Capabilities - Ocean Freight
- Geographical Service Provision - 22%
- Years in Service - 20%
- Industries Served - 18%
- Revenue Generated - 13%
- Employee Strength - 12%
- Certifications - 8%
- Key Clients - 7%
Functional Capabilities - Ocean Freight
- LCL and FCL Management - 15%
- Handling of oversized and heavy weight cargo - 15%
- Online tracking and freight management system - 15%
- Customs brokerage/clearance services - 15%
- Maritime cargo insurance - 15%
- Temperature and humidity contro - l15%
- Others - 10%
Rate Benchmarking
The geographical location, supply chain complexities, transportation and labor, and size and volume of shipment play a vital factor in analyzing the rate benchmarking of the ocean freight industry. Under geographical location, factors such as distance between the destination and originating ports and proximity to major trade routes can significantly impact shipping rates. Similarly, customs regulations in different countries, specialized handling requirements, and the complexity of cargo handling, such as hazardous materials or perishable goods, may incur additional charges under the supply chain header and further impact freight rates.
For example, ongoing supply chain issues like Houthi missile attacks and Red Sea disturbances have resulted in ships having to change their routes, leading to port congestion and longer lead times. In February 2024, ocean and shipping freight rates surged by 173% on trade lanes from Asia to North Europe, with carriers adding surcharges ranging from USD 500 to 2,700 per container. The Red Sea crisis also negatively impacted Indian shipping rates. In February 2024, containers traveling from Shanghai to Chennai saw a 144% increase in freight costs on specific routes in addition to longer transit times for vessels. On average, shipping freight rates from India to the U.S. and European countries witnessed a 40 to 50% increase across major industries such as pharmaceuticals, textiles, and automotive in January 2024 from September 2023.
Supplier Newsletter
- In May 2024, Hapag-Lloyd announced a collaboration agreement with IKEA. As part of Hapag's decarbonization efforts, it plans to reduce emissions from its container shipments originating from Asia. Both companies have agreed to use Hapag’s biofuel product “Ship Green 100” between March 2024 and February 2025. These containers run on biofuel derived from trash and residues rather than traditional marine fuel oil. This move is expected to reduce approximately 100,000 tons of CO2 emissions.
- In April 2024, Maersk docked its second largest methanol-enabled vessel, “Astrid Maersk”, at Shanghai’s Yangshan port. This was done in partnership with Shanghai International Port Group (SIPG) for methanol bunkering with concurrent cargo and bunkering operations in China. The deal plans to enhance and expand methanol-enabled tanker deployment throughout Asia and Europe and promote the transition to a low-carbon economy.
- In October 2023,Maersk announced a strategic partnership with Starlink (Space X). In this deal, Maersk will utilize the latter’s satellite network connection in its fleet operations. Starlink will be used in 330 of Maersk’s ocean fleet/ container ships that will have high-speed internet connection with 200+ Mbps download speed. The deal also includes integrating cloud operations to streamline workflows for improved efficiency. Maersk's main goal is to digitize its vessel operations and improve remote support and vessel inspections. This agreement also strengthens Starlink's presence in the shipping industry, as they already have partnerships with Happag Lloyd and NetTalk Maritime.
List of Key Suppliers
- Mediterranean Shipping Company (MSC)
- A.P. Moller - Maersk
- CMA CGM Group
- China COSCO Shipping Corporation Limited
- Hapag-Lloyd AG
- DB Schenker AG
- DSV A/S
- Hellmann Worldwide Logistics Inc.
- Nippon Express Co., Ltd
- DHL Group
- Kuehne + Nagel International AG
- C.H. Robinson Worldwide, Inc.
- Kerry Logistics Network Limited
- Dachser Group SE & Co. KG
- GEODIS S.A
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Ocean Freight Procurement Intelligence Report Scope
- Ocean Freight Category Growth Rate : CAGR of 4.8% from 2024 to 2030
- Pricing Growth Outlook : 10 - 22% (Annually)
- Pricing Models : Volume-based, ad-valorem pricing, flat or fixed rates, spot or contract rate pricing models
- Supplier Selection Scope : Cost and pricing, past engagements, productivity, geographical presence
- Supplier Selection Criteria : Cargo handling capacities, FCL or LCL, cargo insurance, temperature control capabilities, online tracking, technical specifications, and other operational and functional capabilities
- Report Coverage : Revenue forecast, supplier ranking, supplier positioning matrix, emerging technology, pricing models, cost structure, competitive landscape, growth factors, trends, engagement, and operating model
Brief about Pipeline by Grand View Research:
A smart and effective supply chain is essential for growth in any organization. Pipeline division at Grand View Research provides detailed insights on every aspect of supply chain, which helps in efficient procurement decisions.
Our services include (not limited to):
- Market Intelligence involving – market size and forecast, growth factors, and driving trends
- Price and Cost Intelligence – pricing models adopted for the category, total cost of ownerships
- Supplier Intelligence – rich insight on supplier landscape, and identifies suppliers who are dominating, emerging, lounging, and specializing
- Sourcing / Procurement Intelligence – best practices followed in the industry, identifying standard KPIs and SLAs, peer analysis, negotiation strategies to be utilized with the suppliers, and best suited countries for sourcing to minimize supply chain disruptions
