Many companies that source products internationally and rely on ocean transportation to the U.S. do not have an established strategy for obtaining optimal rates and service. While some organizations have an established international logistics group other groups perceive international shipping as more of a task, or a perceived type of utility cost where the cost of ocean transport is simply the spot market.
However, establishing a structured and strategic approach to managing inbound ocean shipments can yield significant benefits in cost control, service performance, and inventory management. A well-designed ocean transportation strategy provides the framework to shift from reactive to proactive logistics planning.
Below are factors to consider when developing a solid inbound ocean rate strategy.
Volume Projections
The very first agenda item is to forecast shipping volumes. Interestingly, knowing exactly where your suppliers’ shipping locations are located is not always apparent to companies. But it is necessary to identify origin and destination and the total number of TEU’s (Twenty-foot Equivalent Unit) along with any seasonality of the shipments. This is vital information that is used to share these projections with carriers to negotiate volume commitments and rates.
Contracting vs. Spot Market Strategy
Some companies ship exclusively via the spot market, meaning these rates are determined by the demand and supply for sailing slots at that specific time. And while this strategy might work for companies that ship a limited number of ocean containers, it is not a good strategy for companies that have higher volume of shipments and TEU’s. Spot ocean container rates can fluctuate wildly. An example is when companies attempted to beat tariff implementations applied to imports. Spot rates for containers sky rocketed. However, once the tariffs were implemented spot rates dropped drastically. Fixed annual contracts provide stable rates and are less sensitive to market swings. This would allow an accurate management of an ocean transportation budget.
Ocean Carrier Selection and Diversification
Ocean carriers manage their own operations, including vessel scheduling, maintenance, and cargo handling. It is essential to conduct thorough research to establish clear criteria for carrier selection. Key factors to evaluate include cost, transit time, service reliability, geographic coverage, and port accessibility. To mitigate risk and ensure service continuity, companies should avoid over-reliance on a single carrier and instead pursue a diversified carrier strategy.
Freight Forwarder and NVOCC Relationships
Freight forwarders act as intermediaries, coordinating multiple aspects of the international shipping process on behalf of the shipper. Their services typically include arranging transportation, preparing documentation, and providing additional support such as customs brokerage. When evaluating freight forwarders, it is critical to consider more than just cost—factors such as customer service quality, shipment visibility tools, and issue resolution capabilities are equally important.
Non-Vessel Operating Common Carriers (NVOCCs) function as ocean carriers, despite not owning or operating their own vessels. They issue their own bills of lading and assume responsibility for managing the shipment from origin to destination. As with freight forwarders, choosing the right NVOCC requires evaluating service reliability, global coverage, and their ability to manage logistics across complex trade lanes.
Lane and Port Strategy
Once supplier and customer locations are defined and projected shipment volumes are estimated, it becomes essential to optimize origin and destination ports to balance both cost and service. Developing a port strategy should include primary and alternate ports to account for potential disruptions such as congestion, labor disputes, or seasonal delays.
Port decisions must align closely with inventory management and purchasing strategies. For instance, a shipment originating in Asia may be routed through West Coast ports, followed by inland transportation via rail or drayage to the final destination. Alternatively, the same shipment could be routed through East Coast ports, which typically involves longer transit times but may offer cost or service advantages depending on market conditions and the location of the final delivery point. Route selection should consider transit time, rate variability, and network efficiency to ensure optimal performance across the supply chain.
Performance Metrics and KPIs
As previously noted, a freight forwarder that provides visibilities of shipments is important. It is important to use the technology provided to develop key performance indicators. Monitoring the service of shipments and performance of carrier is vital to hold partners accountable. KPI’s would include such as on-time delivery, dwell time, container utilization, cost per unit and container detention/demurrage charges.
Risk Management and Contingency Planning
Proactive risk management is essential to maintaining a resilient supply chain. Disruptions such as labor strikes, severe weather, geopolitical instability, or unexpected market shifts can significantly impact ocean transportation. To mitigate these risks, organizations should develop comprehensive contingency plans that include alternative ports of entry, backup carriers, and flexible routing options. In some cases, it may be necessary to expedite shipments or delay them strategically, ensuring alignment with inventory and purchasing strategies.
A well-prepared contingency plan accounts for a wide range of potential disruptions—including geopolitical events, pandemics, carrier alliance shifts, and port closures. Having pre-defined protocols in place allows for faster decision-making and minimizes the impact of unforeseen events on cost, service, and overall supply chain performance.
Conclusion
Developing and implementing a structured ocean freight strategy enables organizations to transition from a reactive approach to a proactive, strategic model in managing international logistics. This shift enhances financial control, improves service reliability, and strengthens resilience against disruptions. In today’s increasingly complex and dynamic global trade environment, a well-executed ocean transportation strategy is essential for achieving long-term supply chain efficiency and customer satisfaction.
—Tom Schaefges, St. Onge Company
