If you are running your business overseas, then you know that shipping costs have been rising steadily since the Autumn of 2020. The first few months of 2021 have seen price surges when it comes to global shipping costs. This was happened across numerous freight rates but also along primary trade routes. Moreover, prices for some trade lanes tripling as compared to last year. Global shipping costs look set to continue in this upward trend. The question is what are the reasons for the shipping price surges? Can we expect that global shipping costs will continue to rise? Today our logistic and shipping experts will try to help you realize what is happening with shipping costs globally. Whether you need shipping to Qatar or anywhere else in the world, you will want to calculate your shipping costs. Only this way you can set your budget and run your business smoothly.
Imbalances in the production and demand for goods is why global shipping costs will continue to rise
From the start of the Coronaviruus pandemic, the whole world starts dealing with imbalances in the production and demand for goods. As many countries locked down and reopened at different times, it was impossible to predict anything. When it comes to shipping services, it was so hard to find a balance and establish new regular shipping routes without losing a lot of money because of the empty containers. For that reason, shipping companies cutting the capacity on major routes and also shortages of empty containers.
As the recovery start progressing, global demand has recovered strongly. This was seen particularly in the sectors which are most closely linked to international trade in goods. As economies open up further, everything starts recovering. Inventories are rebuilt across the several links of supply chains, and for that reason, demand for ocean freight capacity has intensified. The only solution not only for Easy Move Kuwait but also all other shipping and logistics companies worldwide were increasing costs of services. Only this way they could keep conducting their operations without taking a risk of upcoming falling when it comes to demand.
The lack of alternatives is why global shipping costs will continue to rise
How many alternatives to ocean freight do you know? Unluckily, there are just a few alternatives to ocean transportation. Before you opt for shipping by train or air you should consider products value but also limited capacity and spiking tariffs. An option for shipments of higher value products is shipping by train or air. What you need to check before hiring air freight forwarding companies in Kuwait are the costs you will need to pay. Will this transportation method will be cost-effective for your business? It will mainly depend on the value of your products. When it comes to lower-value products like household items, toys, clothes, or promotional articles, the situation is different. Unfortunately, they have seen freight costs increase from around 5% of their sourcing costs to more than even 20%.
The struggle of absorbing shipping costs increases is the main reason why so many business owners need to rent climate controlled storage units and wait to get a chance to transport their goods. Only this way business owners could take control of their goods and wait for a perfect moment to transport their goods. Nevertheless, not all of the products could stay usable eternally. Unluckily, this could lead or changes in product availability. Also, consumers may start to feel the impacts through price increases on the market. Still, one thing is for sure- global shipping costs will continue to rise.
The uncertain situation with COVID-19 and unbalanced recovery
One of the reasons for rising global shipping costs is an unbalanced recovery in the sector of global production, trade, and demand. What you can spot is that some counties are already exporting more goods than they did before the Coronavirus pandemic. But don’t let that confuse you, the situation is not the same for many other countries. Unluckily, exports from others countries such as the United States of America continue to lag behind the overall increase. The good thing is that the trade-in goods will rise further. For sure it will continue recovering day by day. Nevertheless, not only for major trading countries but also their trade partners. However, such an unbalanced recovery will continue to compound world trade issues. This will include terms of the displacement of empty containers, for sure.
Port congestion and closures
Another reason why global shipping costs will continue to rise is connected with port congestion and closures. As suggested by the link between canceled sailings and delays, congestion is a huge problem. Unluckily, the rate of vessels keeping to schedules has dropped. It is also accompanied by a rise in the delays even of late vessels. There are some signs that recovery and average performance will start to improve. As the share of vessels is reaching their destinations on time it leads to stopped sliding in April 2021, and average delays improved. When it comes to terms of lower rates of vessels keeping to schedule, and average delays for late vessels rising, some performance starts to rise. Shipping performances in 2021 have carried on where 2020 left off. Nevertheless, overall performance remains lowest in a decade of records.
Many business owners could not keep running their businesses without shipping goods by sea. Whether you shipping to Saudi Arabia or anywhere else, we will be there for you. Although the global price surges could impact your business plans, you will need to adjust to this situation. All you can do is make a new plan when it comes to your finances. This is the only way you will be able to continue your job. Also, you should consider freight alternatives according to the value of the products and see if this is a good option for you. There are many reasons why global shipping costs will continue to rise, we all hope it will change!