13.9 C
Tuesday, June 18, 2024
Home Most Visited Sea-Intelligence sees no correlation between reliability and freight rates

Sea-Intelligence sees no correlation between reliability and freight rates

The Danish provider of research & analysis, data and advisory services within the global supply chain industry, Sea-Intelligence has conducted a survey to see whether schedule reliability is related to freight rates.

The company analysed the relationship between those two, aiming to see whether periods with high schedule reliability resulted in higher freight rates.

"Whenever there is talk of schedule reliability, shippers have complained about the general lack of service quality in the industry. One debate that often then comes at the forefront, is whether shippers are at all willing to pay a premium for better schedule reliability," noted Alan Murphy, CEO of Sea-Intelligence.

Sea-intelligence did the analysis across seven port-pairs, using its own schedule reliability data and freight rate data obtained from World Container Index (WCI).

"For each of the port-pairs, we used a scatter plot showing the WCI on the y-axis and schedule reliability on the x-axis, also adding in a liner trend line and the coefficient of determination (R-squared) which shows the strength of the correlation," said the Danish researchers.

For nearly all of the port-pairs, the R-squared value was low, denoting weak to no correlation. The only exception to this was Shanghai-Rotterdam, which had an R-squared value of 0.63 as shown below, which, according to the research company, means that roughly 63% of the variation in freight rates can be explained by changes in schedule reliability.

Source: Sea-Intelligence.com, Sunday Spotlight, issue 541

"However, the trend line is negative, which means that during periods with high schedule reliability, freight rates were low and vice versa," pointed out Sea-Intelligence, who also noted that, while there can be exceptions for some specific niche carriers and individual shippers, the broad market trend is quite simple in this respect.

Reliability tends to improve when there is overcapacity, as this makes it easier to adhere to schedule, but this also entails high reliability mainly occurs at points in time, where rates are going down and not going up.

"We saw the same happen during the pandemic, with schedule reliability going up during the early periods with low demand levels and high blank sailings, and schedule reliability dropping considerably as vessels started to sail fuller and berth congestion rose," commented Murphy.

Latest Posts

OrbitMI guides navigation through complex digital landscape for sound tech adoption

The maritime software market is teeming with numerous vendors offering a wide array of technologies aimed at achieving data-driven operational efficiencies. These efficiencies are crucial...

Navigating the Changing Tides of the Container Shipping Industry in East Asia

As East Asia's container shipping industry sails into uncharted waters, it faces a shifting tide of customer demand reshaping the very foundations of maritime...

Spot rate growth slows but ocean container shipping market will remain extremely challenging

Ocean freight container shipping spot rates are set to increase further, but there are signs the recent dramatic growth may be slowing. The latest data...

Sweden-Belgium Green Shipping Corridor project enhanced with new partner

Port of Gothenburg, North Sea Port, and the Danish international shipping and logistics company DFDS have welcomed the Port of Antwerp-Bruges to the Green...

Containers lost at sea at record low levels

The World Shipping Council (WSC) has released its annual report on containers lost at sea, revealing a significant decrease to 221 boxes lost in...