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Business Environment Profiles - Australia

Water freight service price

Published: 29 August 2024

Key Metrics

Water freight service price

Total (2025)

167 Index

Annualized Growth 2020-25

10.0 %

Definition of Water freight service price

This report analyses the service price of general water freight. The data for this report is sourced from the Australian Bureau of Statistics' Producer Price Index (PPI) for Water Freight Transport, which is a subdivision of the Transport (freight) and Storage Division. The overall PPI measures the price of all goods and services received by producers. The water freight transport PPI is a component of the overall PPI and measures the weighted average price of water freight transport including domestic coastal sea freight, river freight, harbour freight and international sea freight transport services between domestic and international ports. The base year of the index is 2011-12.

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Recent Trends – Water freight service price

IBISWorld forecasts the water freight service price index to average 166.8 index points across 2024-25, representing a 12.0% fall from the previous year. The gradual easing supply chain issues and a more general downward trend in global inflation are set to place downward pressure on operating costs for water freight service providers, leading to a decline in prices over the year. Demand for bulk freight services is also expected to ease following a troubling period for the Mining Division in the current and previous years, which is tanking demand for mining exports.

Key drivers of water freight service prices include fuel prices, labour costs and demand conditions. Operating costs have risen for water freight operators over the past five years on the back of 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 resulted in an unprecedented surge in the water freight service price in 2021-22 and 2022-23.

The past five years have seen an unprecedented level of volatility in price and demand for water freight in Australia. Domestic coastal shipping volumes have come under pressure severe at times 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 decline in annual coastal shipping freight volumes in Australia, from 108.9 billion tonne kilometres (tkm) in 2019-20 to 91.3 billion tonne kilometres (tkm) in 2022-23 (latest available data). The unprecedented surge in water freight prices in 2021-22 and 2022-23, have also put downward pressure coastal freight volumes over the period. On the other hand, bulk freight like agricultural and mining commodities typically account for over 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 grown over the past five years, with iron ore and gold production volumes rising. Growth in agricultural production, including a record wheat crop in 2022-23, have also 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. Weakening output in the Mining and Agricultural Divisions in the past few years have 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 10.0% over the five years through 2024-25.

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5-Year Outlook – Water freight service price

IBISWorld forecasts the water freight service price to rise by 2.6% in 2025-26, to 171.1 index po...

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