Ocean Freight Economics: What Every Sourcing Manager Should Track

Your factory price is only half the story. For US companies sourcing manufactured parts from Asia, ocean freight can represent 10–25% of total landed cost — and that number moves constantly. Smart sourcing managers treat freight as a strategic variable, not an afterthought.

The Key Index to Watch

The Drewry World Container Index (WCI) tracks spot rates across major global shipping routes. It's the benchmark that logistics professionals, freight forwarders, and procurement teams use to anticipate cost trends. Rates on routes like Shanghai–Los Angeles can shift 5–10% in a single month.

How Freight Impacts Your Sourcing Strategy

• Landed cost calculations: A part that's 15% cheaper at the factory gate might cost more after freight — especially for heavy or bulky components.
• Country-level decisions: Vietnam's major ports (Cai Mep, Cat Lai, Hai Phong) offer direct routes to US West Coast with 14–18 day transit times — often comparable to or faster than southern China.
• Order timing: Q3 typically sees peak rates ahead of the Western holiday season. Shifting orders earlier can save significantly.
• FOB vs. CIF: Understanding your freight negotiating power helps you choose the right Incoterms.

Vietnam's Logistics Edge

Vietnam has invested billions in port infrastructure. Cai Mep deep-water port handles the world's largest container vessels. Combined with favorable trade agreements (CPTPP, RCEP), Vietnam increasingly offers better total economics than China for US-bound manufacturing — especially with ongoing tariff pressures.

5 Freight Management Tips

1. Track the WCI monthly — build it into your cost modeling
2. Negotiate freight terms based on your annual shipping volume
3. Use consolidation services for smaller shipments
4. Plan order calendars around seasonal rate patterns
5. Partner with a sourcing company that handles logistics from factory to warehouse