Why are SITC's volumes up but freight rates down?

Higher volumes reflect sustained global trade demand, but excess container capacity across the industry—combined with reduced blank sailings and increased competition—is pressuring spot rates and contract renewals downward. This is a classic supply-demand imbalance favoring shippers in the near term.

What should shippers do in a low-rate environment?

Lock in longer-term contracts at favorable rates while rates are depressed, but negotiate for improved service commitments (reliability, speed, flexibility) rather than just pursuing the lowest unit cost. Build inventory strategically to absorb any future rate recovery.

How long will freight rate pressure persist?

Rate pressure typically continues until carriers reduce capacity or demand spikes significantly. Monitor industry capacity utilization, blank sailing announcements, and consolidation activity. If utilization falls below 80%, rates may remain under pressure for several quarters.

What are the implications for contract renewals?

Shippers in Q2–Q3 contract renewals have leverage to negotiate lower FAK rates and improved terms. However, ensure sufficient supply chain resilience by maintaining relationships with multiple carriers and avoiding over-concentration of volume with distressed carriers.

Should shippers shift modal mix or sourcing in response?

With ocean rates under pressure, now is an opportune time to review nearshoring or nearshoring opportunities and shift less time-sensitive freight to ocean. However, maintain air freight capacity for demand volatility. Monitor port congestion to ensure savings aren't eroded by dwell time.

Shipping & Freight

Moderate

SITC Q1 Shipping Volumes Rise Amid Freight Rate Pressure

Apr 21, 2026

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The signal

SITC's Q1 results present a paradoxical picture for the container shipping industry: while the carrier achieved higher shipping volumes, suggesting sustained demand for oceanborne transport, it simultaneously confronted declining freight rates that compress profitability. This dynamic reflects the ongoing tension between capacity supply and pricing power in the post-pandemic shipping landscape.

For supply chain professionals, this signals continued softness in spot rates despite volume resilience, making it critical to lock in contractual rates where possible while capitalizing on shipper-favorable pricing to negotiate better service levels and terms. The divergence between volume growth and rate deterioration underscores that overcapacity remains a structural headwind, even as absolute shipping demand remains healthy.

Shippers should monitor carrier utilization trends and consolidation activity, as further rate pressure could force carriers to reduce capacity deployments, potentially tightening supply and resetting the pricing dynamic.

Frequently Asked Questions

What This Means for Your Supply Chain

Simulation Suggestion

strategic

What if SITC or competitors file for consolidation or capacity reduction?

Simulate a scenario in which carrier consolidation or strategic capacity exits reduce overall industry capacity by 10–15%, leading to spot rate recovery and potential contract rate increases. Assess impact on procurement flexibility and cost projections for 2024–2025.

Run this scenario

Simulation Suggestion

this week

What if carrier capacity reductions cause transit times to extend by 1 week?

Model the impact of carriers reducing scheduled sailings or increasing blank sailings, resulting in longer transit times on key lanes (e.g., Asia-North America, Asia-Europe). Assess impact on inventory levels, safety stock, and service level targets.

Run this scenario

Simulation Suggestion

this month

What if freight rates fall another 15% over the next quarter?

Simulate a 15% reduction in ocean freight rates across all trade lanes. Recalculate landed costs for major trade lanes, assess impact on procurement strategy and total cost of ownership, and identify opportunities to shift volume to ocean from air or expedited services.

Run this scenario

Go deeper:

Supply Chain Simulation: A Guide for Operators

What discrete-event, agent-based, and Monte Carlo simulation actually do, in plain language for supply chain leaders.

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The signal

Frequently Asked Questions

What This Means for Your Supply Chain

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