Freight Rates Down....For Now

Looks like a great picture, doesn't it? Those who spent $10,000 or more for the same service last year are breathing a sigh of relief and are likely looking at a more-relaxed shipping environment today. But will it last?

One result from the increase in prices for shipping is that the carriers made profits, which they can now invest. Some have already taken additional vertically integrated postures, buying technology, port terminals, and other service providers in the supply chain ecosystem. This vertical integration may result in more efficient services, and could result in lower prices as the cost to provide transportation services goes down. However, the opposite might happen when the consolidation of providers results in additional market power.

As one looks at consolidation in other markets: healthcare, agriculture, banking, air travel, event ticketing, we see a similar pattern. Prices stabilize or even decrease slightly in the short term, then rise. Let's hope that transportation does not follow this pattern, and that improvements in technology, automation, and transparency keep the cargo moving and our economies strong.