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REUTERS/FABIAN BIMMER

World - Shipping lines have reached the peak of their pricing power

Before the pandemic, the world’s largest shipping lines eked out narrow profits in a fiercely competitive industry. Retailers booked and canceled orders with impunity, while shipping firms slashed freight prices to retain their mercurial customers. Then, covid upended global supply chains and reversed that power dynamic virtually overnight.

Before the pandemic, the world’s largest shipping lines eked out narrow profits in a fiercely competitive industry. Retailers booked and canceled orders with impunity, while shipping firms slashed freight prices to retain their mercurial customers. Then, covid upended global supply chains and reversed that power dynamic virtually overnight.

By the middle of last year, freight capacity was in such short supply that retailers were competing against each other to secure valuable space on container ships for their goods. Shipping lines quickly took advantage of their new leverage to hike prices. By this September, freight rates were 20 times higher than they were at the start of the pandemic, prompting some to accuse the firms of price gouging.

But shipping lines’ market power is finally starting to wane. Ocean freight rates from Asia to North America, after plateauing in September, are starting to drop, according to data from the freight booking platform Freightos. Between Nov. 5 and Nov. 12, prices fell 21%—the largest week-on-week drop since the pandemic began.



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