Ocean Freight Services – Procurement Best Practices & Sourcing Strategies

DESCRIPTION

Ocean Freight Services Market Global Size:

ELINT Market Research released a recent ocean freight procurement market research report, which indicates that the global ocean container port traffic is predicted to increase and acquire 900 million TEUs (Twenty-Foot Equivalent Units) in the year 2023. Undoubtedly, this prediction shows rapid expansion and the vital role that maritime cargo solutions play in cross-border international business. 

Moreover, the ocean freight services market is expected to obtain new containership deliveries in March 2023, especially in the larger vessel areas. Also, a notable count of 32 vessels over 23000 TEU are intended to transport all through this year, and six vessels are planned to ship during March-April.

Market Definition:

The transportation of goods and services across global borders is increasing day by day, which substantially contributes to the ocean freight service market. The businesses working in this sector transfer products in large amounts via marine ships, and for this process, they make alliances with reliable and skilled shipping companies. 

Major Ocean Freight Services Market Drivers:

1. Rising Globalization – 

The first significant driver propelling the maritime freight services market is the growing globalization that connects various industries across national boundaries. Thus, the basic need for reliable shipping solutions also arises, as companies want to complete their worldwide commercial operations.

2. Expansion of E-Commerce – 

As more and more individuals are placing orders for goods from overseas, the e-commerce sector is also evolving daily and swiftly. As a result, it is making products’ import and export activities more necessary among businesses and shippers. 

Global Ocean Freight Services Market Challenges:

1. Impact of COVID Variants –

The constantly evolving COVID variants introducing massive difficulties in the global ocean freight services market, since the government issued strict regulations for shipping projects. These safety protocols are surely beneficial for the worldwide population, but somewhere they form challenges among organizations working in the sea shipping market. 

2. Workers’ Strike in Europe – 

Another major factor that impacts the ocean freight services market day by day rising walkouts of workers in significant European dockyards. These strikes hinder the transportation of products, and consequently, organizations face delays in goods shipping. 

Ocean Freight Services Market Opportunities:

1. Evolution of E-Commerce –

The ocean freight services market experiencing significant opportunities due to the evolution of e-commerce and international trading actions. Hence, as people order home and personal care goods across borders, the shipping businesses also grow. 

2. Invention of Technologies – 

Nowadya’s sea freight market integrates different technical systems to streamline shipping processes like tracking of goods, data management, speed, safety, etc. Hence, this is a prominent opportunity among industry players working in the freight services business. 

3. Environment-Friendly Shipping Methods – 

Increasing awareness for climate safety driving opportunities for eco-friendly ocean freight practices. Businesses are widely investing in such natural products to reduce carbon count in the environment.

Ocean Freight Services Market Segmentation:

1. Type of Shipping Service – 

The foremost segmenting factor for the ocean freight market is employing different types of services, that companies can use to ship their goods. In the first type, an entire container comprises the products of only one customer. Further, in the second service type, multiple consumers’ goods are placed in a container to dispatch them into smaller freights. 

2. Type of Industries- 

Another key segmentation factor is which type of sectors are using ocean freight services like automobiles, medicine, consumer products, e-commerce, etc. Ocean freight suppliers can use this segmentation to fulfill the distinct needs of each industry.

3. Capabilities of Shipping Liners – 

Each ocean freight provider has different expertise, shipment methods, and passages; thus, businesses must first understand their strengths and weaknesses, and then choose their shipping partners wisely. 

Impactful Cost Component in the Ocean Freight Services Market:

Shipping companies and businesses use one major cost component to manage their financial relations in which they keep track of bunker fuel and vessel costs that include 55% of the total expenses. In this context, bunker fuel price covers the costs of different components like demography, oil expense, government rules, etc. Further, the vessel costs cover the prices of staff, ship purchase and supervision, etc.

Pricing Models in the Global Ocean Freight Services Market:

Shipping organizations and their consumers use two pricing mechanisms to handle their financial agreements. The first method is contract pricing in which businesses can negotiate predetermined expenses and rules of the shipping company to fulfill their constant shipping needs. This approach provides a long period for companies to evaluate tediousness and solidity in cost formats. 

On the flip side, the spot pricing method allows shipping companies and consumers to decide on expenditures at the time of freight. This technique helps transporters adjust their costs as per market instabilities. 

Emerging Engagement Strategies of the Ocean Freight Services Market:

Businesses operating in international trade can make direct alliances with shipping firms using a direct liner sourcing engagement strategy at an affordable cost. Hence they do not need to rely on intermediates to create partnerships, and they can have extensive control over customized shipping setups. 

Moreover, in the next engagement approach, businesses can directly engage with port terminals and facilitate multiple processes like freight management, and transparency and perhaps accomplish quicker dispatch intervals.

Ocean Pricing Components in the Freight Services Market:

The foremost ocean pricing model is freight cost in which businesses take care of product transportation expenses, type of freight, and length of passage. Further, the terminal handling charges (THC) include costs for packing and offloading shipments at ports, which consist substantial amount of total expenditure. 

Moreover, the customs clearance factor includes expenses of trading documentation and submissions, which help shippers in the smooth dispatching of products across borders. Apart from these, the other additional cost factors enfold some more distinct payment systems. 

Negotiation Factors in the Ocean Freight Services Market:

Negotiation factors in the ocean freight services market help shipping companies and businesses streamline their international trading actions. The first factor is MQC in which shippers commit to deliver the minimum volume of freight within a fixed time. Also, this aspect usually affects the prices of freight and general expenditure layouts. 

Further, in another vital negotiation factor, businesses use specific lanes or routes in the ocean through which, they want to transport freight ships. In this approach, companies can make deals on distinct terms like quantity of goods, availability of ships, and economic aspects. 

Liner Capability Analysis of the Ocean Freight Services Market:

Businesses working in the ocean freight services market employ linear capability analysis to examine shipping organizations’ expertise and make the right decisions. The foremost factor is analyzing major lanes or routes where transporters operate. The next evaluation factor that companies should use is assessing the worldwide reach of shippers to make sure they meet their diverse shipping requirements.

Moreover, the next aspect that organizations should consider is checking the reliability measures of the shipping company, and ensuring timely transportation of products. Additionally, in the last evaluation factor, businesses should assess in which type of sectors shippers are transferring goods.

Service Models in the Ocean Freight Services Market:

Businesses can use one major goods shipping model on international and regional levels. This approach is known as direct port calls in which large ships stick to one route and travel from one place to another, for example, transpacific and transatlantic routes. 

Further, in this context, the next model is the hub and spoke system, which works in the Asia-Pacific region. In this procedure, all products are placed in one large center from different domains and then shipped through miniature ships to various destinations. Hence, businesses can select any service model according to their particular needs. 

Leading Market Suppliers of the Ocean Freight Services Market:

Currently, several top industry participants are active in the enormous market for international ocean freight services, including Maersk​, MSC​, Cosco Group​, Hapag Lloyd​, ONE​, Evergreen​, HMM​, Yang Ming​, ZIM​, and Wan Hai​.