Shipping expert says current market conditions could work in favour of Australian businesses, urging companies to stock up on overseas goods now if they can.
Global freight rates have fallen in recent weeks, on the back of softening consumer demand and with last month traditionally being a ‘quieter’ month after peak season.
EES Shipping Managing Director Brian Hack says if possible, businesses should try to use this to their advantage.
“Our general advice to clients is that if they have the financial ability and the space to hold stock, they should buy while they can.”
“While we’re not expecting freight rates to dramatically increase any time soon, current low rates coupled with vessel availability and minimal bottlenecks and congestion mean now is a good time to order.”
“Additionally, if you’re ordering stock you don’t require immediately, you could potentially book an even cheaper rate and not have to worry about goods arriving within a particular timeframe.”
Hack says several conditions are working in favour of importers;
- Freight Rates: Rates have dropped in recent weeks, with Drewry’s World Container Index at its lowest level since May last year, and more than 70% below the peaks of the pandemic.
- Shipping Times: Despite re-routing continuing in the Red Sea, Mr Hack says for the most part, vessels are free-flowing and congestion and bottlenecks are at a minimum.
- China: Production in China is ramping up again after the Chinese New Year, with suppliers also keen to offload goods to markets outside of the US, on the back of recent tariffs imposed by the Trump Administration. “Suppliers in China are currently willing to negotiate, meaning there’s an opportunity for favourable contract terms and the potential to secure goods at a cheaper rate.
- Interest Rates: The Reserve Bank’s decision to cut interest rates recently will likely provide some financial breathing room and bolster confidence for businesses and consumers.
Mr Hack concedes the weaker Australian dollar and higher landside charges aren’t ideal but says other market conditions still provide a strong advantage.
“We often advise clients that the best way to avoid being caught out by congestion and potential price increases is to plan where possible.”
“This is one such scenario where if you can order and hold stock now, you could potentially be ahead of the curve and find yourself in a strong position when peak season returns.”
Cejay is a Content Producer for Supply Chain Channel, Australia's learning ecosystem created to fill the need for information, networking, case studies and empowerment for everyone in the supply chain sector.
