Ocean Carriers Reinvent Pricing Strategies Amid Market Volatility - But Will It Stick?

March 9, 2025 | Simon Mang, Worldcraft Logistics

The ever-changing landscape of ocean shipping is forcing carriers to rethink their pricing strategies, shifting from a volume-driven approach to a more profit-centric model. This transformation marks a significant departure from the traditional mindset of securing market share at any cost. Instead, ocean carriers are now enforcing stricter freight rate policies, prioritizing financial sustainability over aggressive discounting.

At the S&P Global TPM 2025 conference in Long Beach, California, industry leaders discussed this shift and the challenges ahead. Panelists emphasized that ocean carriers are now focused on yield management, cost efficiency, and leveraging new tools to optimize operations. "For years, carriers prioritized filling their vessels, even at unprofitable rates," said Bob Fredman, principal at SF Global Insights, LLC. "Now, there's a top-down boardroom mindset that 'We can make money'-and they are enforcing it."

Stricter Rate Enforcement and Changing Market Dynamics

Carriers are implementing tighter controls on space allocation under annual service contracts, ensuring that shippers comply with their commitments. Stephanie Loomis, an ocean product and logistics expert, noted that non-vessel operating common carriers (NVOs) are under heightened scrutiny. "Carriers are much more in tune with how NVOs operate," she explained. "Many are requiring them to tender a portion of their freight under higher spot rates, limiting their ability to negotiate lower contract rates."

This shift has eliminated past pricing advantages for smaller shippers. "It used to be that an importer moving 1,000 TEUs could secure a rate close to that of a large beneficial cargo owner (BCO)," Loomis added. "Those days are absolutely gone."

According to Robbert van Trooijen, founder of global investment firm Inception Partners, the origins of this pricing evolution trace back to the U.S.-China trade war, which began before the COVID-19 pandemic. "Carriers saw the risks of undercutting rates too aggressively and decided it was unsustainable," he said.

Sanjay Tejwani, CEO of 365 Logistics LLC, echoed this sentiment. "Carriers have learned to say no to deep discounting. They’ve realized they’re not just in the business of offering weekly sailings-they need to turn a profit. That mindset is here to stay."

The Role of Blank Sailings and Market Consolidation

One of the most visible results of this shift is the increased use of "blank" sailings, where a carrier cancels a scheduled voyage if it is not sufficiently profitable. "Blank sailings are now part of the landscape," said Tejwani. "If skipping a port call makes financial sense, carriers won’t hesitate. That’s the new reality."

Freight forwarders are also feeling the squeeze. "When demand is weak, carriers lean on forwarders for volume," Loomis observed. "But as soon as the market tightens, smaller forwarders struggle to compete with larger firms." This has raised concerns about industry consolidation, with smaller forwarding businesses at risk of being edged out.

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Carrier Profitability vs. Economic Pressures

Despite these efforts, carriers still face external pressures that could challenge their profitability. Søren Toft, CEO of Mediterranean Shipping Company and chair of the World Shipping Council, pointed to potential regulatory and geopolitical disruptions. "All margin ports will have to be reevaluated," he warned. "If President Trump imposes heavy fees on China-built vessels calling at U.S. ports, it could make some routes financially unviable."

However, not all industry leaders are pessimistic. Jimmy Tran, CEO of Worldcraft Logistics LLC, offered a more balanced view. "While rate enforcement is necessary for carrier stability, shippers also need reliability and transparency. A sustainable pricing model should work for both sides," he said. "We’re seeing new digital tools and AI-driven forecasting solutions that can help carriers and customers optimize costs more effectively. Those who embrace technology will be in a stronger position to navigate market fluctuations."

A More Optimistic Future for Ocean Shipping

Although some analysts predict downward pressure on rates due to oversupply, others see opportunities for carriers to differentiate themselves through service quality and technology. Heather Hwang, head of Sea Pricing Strategy at LX Pantos, acknowledged the concerns about supply outpacing demand but highlighted potential areas for growth. "Despite challenges, carriers that invest in efficiency, digitalization, and sustainability will have a competitive edge," she said.

Parash Jain, global head of transport and logistics at HSBC, painted a cautious picture of the market, warning of a potential "deeper down cycle." However, even he admitted that strategic planning and disciplined pricing could mitigate some of the risks.

The Road Ahead: Adapting to New Realities

Ultimately, the maritime industry is at a crossroads. The traditional "race to the bottom" pricing model appears to be fading, replaced by a more disciplined, profit-driven approach. Yet, whether carriers can maintain this newfound financial discipline in the face of economic uncertainties remains to be seen.

Jimmy Tran remains optimistic about the industry's ability to adapt. "We’re entering a new era where long-term planning, technology, and strategic partnerships will define success," he concluded. "Those who adapt will thrive."

You are reading the article Ocean Carriers Reinvent Pricing Strategies Amid Market Volatility - But Will It Stick? As ocean carriers and logistics providers adjust to these new realities, shippers must also prepare for a more structured and transparent pricing environment-one that balances profitability with service reliability in a rapidly evolving global trade landscape.

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