The levels of demand throughout the pandemic are fluctuating and a lot of companies are experiencing supply issues. As a result, shipping costs have risen and the competition is fiercer than ever. In addition, international shipping rates are not always clear. All this together has made sea freight transport complex and expensive. And now it is predicted that freight rates will rise even further this year. This is because global demand continues to rise and the increase in shipping capacity is not growing fast enough. As a result, the container shipping lines are finding it difficult to continue providing a good service.
We tell you more about the reasons why costs keep rising, what the consequences are, and how you can still rely on good service in times of crisis.
Reasons global shipping costs will continue to rise
There is little sign of relief when it comes to rising rates. As mentioned earlier, this is caused by a growing demand, while the shipping capacity is not growing fast enough. We are lagging behind. We have investigated why the costs are not going down in the short term.
- The pandemic is not over yet. In many countries, the borders and factories are open as before. But in some countries they are not. As long as this remains unbalanced, because people have to go back into lockdown, the economy will remain unbalanced.
- There is no quick-win solution. This is because there are relatively few alternatives to sea freight. This is because the capacity of other transport modes is also limited. In addition, costs are growing throughout the shipping industry. At a certain point, choices have to be made in order to be willing to pay these rising costs in order to transport cargo or make goods in the chain more expensive.
- Port congestion like Suez Canal, West Coast, China’s Yantian container port, etc. This has caused prices to rise even more.
It is predicted that prices will not fall until 2023. In addition, it is still uncertain what the Corona pandemic will do to the world. If there are any more lockdowns, it could just take longer.
It is now clear that the pandemic and the congestions at certain ports have caused prices to rise. Besides causing problems for prices throughout the chain and a capacity problem, this has other consequences. Consumers are going to feel the effects of price increases and changes in the availability of products. In the long term, this could have a global impact on purchasing power and propensity to buy.
Product availability is one of the biggest concerns at the moment. Black Friday will soon start and Christmas is also just around the corner. Retailers are having issues replenishing stock and expressed concern over product shortages.
Shipping costs to consider
Freight rates continue to rise and in order to make the best financial choice, we recommend that you research carefully which price is best for you at the moment. The cost of transporting cargo internationally can vary considerably. Calculating freight rates remains complex, but the right information can go a long way.
How ILS can help:
Service orientation is our number one priority. We are only part of the current problems in the ocean freight forwarding industry. If we can help you with even a small part of your problem, we are there for you.
Our strength is providing tools and resources to secure your sea freight in the best possible way. If you ensure that your cargo is transported as safely as possible, you have already eliminated a bottle neck. Unfortunately, this does not directly address rising costs, but poorly securing your cargo can increase your costs even more and limit the availability of products.
We know the international freight industry well. If you have a question or a problem, we are there to help you as best we can.