In the world of logistics and transportation, the term shipper’s market refers to a situation in which those who send goods (shippers) hold the upper hand in the industry, says an article published on Forbes website.
Summary
- The “shipper’s market” refers to a situation where shippers hold the increased negotiating power in the industry, leading to lower shipping costs and more carrier options.
- The COVID-19 pandemic shifted the market to a “carrier’s market,” but as the market returned to a shipper’s market, businesses should prepare for the end of this cycle.
- Preparing for the end of the shipper’s market cycle involves budgeting for higher shipping rates, going regional, negotiating shipping contracts early, and maintaining a focus on sustainability.
- The shipper’s market is expected to last until the second half of
- The duration of the shipper’s market depends on global events such as regional conflicts, economic uncertainty, and environmental factors such as El Nino weather patterns.
Understanding The Shipper’s Market
The term “shipper’s market” refers to a scenario where those who send goods (shippers) hold the upper hand in the industry. This market condition often brings about lower shipping costs, increased carrier options, and enhanced negotiating power for shippers. These benefits trickle down to other sectors and consumers, influencing pricing, supply chain management, and carbon footprints.
The Impact Of The Pandemic On The Market
The COVID-19 pandemic, however, shifted the market dynamics to a “carrier’s market” as supply chains began to break down. In 2021, opportunists seized the opportunity presented by the excess of freight that needed to moving, attracted by the lure of higher profits. As the pandemic ended, the excess of freight and the opportunists also dwindled, leading us back to a shipper’s market.
Preparing For The End Of The Cyclical Market
- Budget for Higher Shipping Rates: As the scales tip in favor of shippers, it usually means there’s an excess of shipping capacity and a short-fall of cargo to fill it. The oversupply often leads to lower shipping rates. However, these lower rates are not sustainable in the long term. Inflation-driven tariffs will likely increase shipping rates in 2024. Shippers should plan ahead and budget for these inevitable rate increases.
- Mitigate Risk by Going Regional: The pandemic underscored the risk of over-relying on international trade. As a result, many companies are turning to regional suppliers and producing and selling most of their products in the same region. This trend is expected to continue, offering a way to avoid potential discursions and cost increases when the shipper’s market ends.
- Negotiate Shipping Contracts Early: Small businesses can take advantage of a shipper’s market by accessing competitive shipping rates and expanding their customer base. However, these businesses often lack the negotiating power of firm corporations. It’s advisable for businesses of all sizes to lock in contracts for 2024 and beyond while terms are still favorable.
- Demand Accountability to Keep Sustainability Goals on Track: The shipper’s market has led shippers to focus more on sustainability. This is a trend that’s likely to continue, even as the market shifts to a carrier’s market. Businesses that have taken steps to qualify as sustainable service providers will have an advantage. The Environmental Protection Agency’s (EPA) SmartWay program is a reliable resource to help businesses stay on track with their sustainability goals.
The Future Of The Shipper’s Market
The shipper’s market is expected to last until the second half of 2024, possibly longer. The duration of the ship market depends on global events such as regional conflicts, economic uncertainty, and environmental factors like El Nino weather patterns.
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Source: forbes
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