Should we blame carriers for High Prices?
Updated: Nov 24, 2021
We understand that current market is daunting for shippers, as freight prices are incredibly high lowering margins. And as always, people wang to blame carriers over that.
However, Should they really be blamed??? NO! it is simplistic and wrong at the same time. The fact is that carriers have been deploying more ships than ever, facing pandemic driven crew shortages, environmental pressures and other operational challenges. Ocean carriers just went through a decade of rates below their full cost, loosing billion of dollars, and were forced to quit. Their survival was at risk where shippers enjoyed lower shipping prices and freight forwarders also did fine. Now when the rates have spiked it is very easy to blame carriers. However, complex problems have rarely a simple solution, and yet not a single entity to blame. The truth is that the demand has surged to record level high, with insufficient demand exacerbated by all vessels are waiting in queues at the ports.
Ocean carriers deserve to earn a healthy return on their assets. The industry is better when asset owners can make money to maintain their fleets, pay their workers, upgrade capacity, and invest in technology. Over the last decade, market conditions forced many carriers to make tough decisions about which of these vital functions to postpone. It’s fine to dislike the high prices—certainly as a shipper, this is hurting a shipper’s business, and they are right to hate it. But to blame the carriers or act as if they are doing something wrong by charging market prices, fundamentally misunderstands the role markets play in the modern world.