Water freight service price

IBISWorld forecasts the water freight service price index to average 163.1 index points across 2025-26, representing a 6.3% slump from the previous year. The gradual easing of supply chain issues, resolution of industrial disputes and a more general downward trend in global inflation are set to place pressure on operating costs for water freight service providers downwards, leading to a decline in prices over the year. Demand for bulk freight services is also easing, following a challenging period for the Mining Division in recent years, which has led to a decline in demand for mining exports.

Key drivers of water freight service prices include fuel prices, labour costs and demand conditions. Operating costs for water freight operators have increased over the past five years, driven by rising fuel prices. Energy prices soared in the wake of the pandemic, exacerbated by the fallout of the Russia-Ukraine conflict, which caused widespread disruptions in global energy markets. Tight labour market conditions and congestion around some major global ports have also increased operating costs for water freight transport companies. These coinciding trends led to an unprecedented surge in water freight service prices in 2021-22 and 2022-23.

The past five years have witnessed an unprecedented level of volatility in the prices and demand for water freight in Australia. Domestic coastal shipping volumes have suffered significantly over the period, falling sharply over the two years through 2020-21 due to subdued economic activity during the COVID-19 pandemic. These trends have caused a consistent decline in annual coastal shipping freight volumes in Australia, from 120.7 billion tonne kilometres (tkm) in 2018-19 to 88.4 billion tonne kilometres (tkm) in 2023-24 (latest available data). The unprecedented surge in water freight prices in 2021-22 and 2022-23 has also put downward pressure on coastal freight volumes over the period. On the other hand, bulk freight like agricultural and mining commodities typically accounts for a high proportion of coastal freight. As such, demand for coastal water freight services is heavily influenced by mining and agricultural production. Australia's mining output has contracted over the past five years, through the end of 2024-25 (the latest data available), with production volumes of nickel, gold, silver, and copper decreasing. Growth in agricultural production, including a record wheat crop in 2022-23, has supported growth in Australia's export volumes and demand for water freight services over the past five years, which have in turn pushed water freight service prices higher. The weakening output in the Mining and Agricultural Divisions over the past couple of years, especially in 2023-24, has reversed these trends, putting downward pressure on water freight prices. Overall, IBISWorld expects the water freight service price to increase at a compound annual rate of 6.3% over the five years through 2025-26.