Due to the current global situation concerning the pandemic, a lot of things have been affected. Air and sea freight rates are not an exception. We’ve never seen such drastic changes in the freight industry before. So, we’d like to show you exactly what’s been happening and determine the cause. We, at Easy Move Kuwait, have been as affected by it as you and we’re also searching for some kind of explanation or solution. So, how did the freight rates change?
What do freight rates encompass?
So, essentially, what are you paying for when paying freight rates? The obvious answer is the service of shipping your goods. And while this is true, we urge you to take a look at the whole picture. You’re paying people to transport your goods in an airplane or a ship and deliver them to you. Quite often you’re shipping big quantities of cargo. Obviously, everyone who works together on shipping your items needs their compensation.
Freight rates are high because freight is expensive on its own. Everyone working needs a paycheck for their services. Fuel for the airplane or ship needs to be bought. The drivers, movers, and all other staff need to get their cut as well. This is exactly why people opt for freight. It’s very convenient to get someone else to ship your goods. But, it takes a lot of people! As the best shipping company in Kuwait, we can assure you we know what we’re talking about.
How exactly did freight rates change?
To everyone’s surprise freight rates have skyrocketed like never before. The rates for a 40-inch container can be as high as $4.000 per container, which is unprecedented. If you’re up to date, there has been a ship that got stuck in the Suez Canal creating quite the commotion. It put billions of dollars worth of global trade on hold until the situation got taken care of. And even though everything is fixed now it had a huge impact on the sea freight industry. The Suez Canal is after all one of the most important pathways for sea freight.
Even before this whole debacle, container prices have steadily been going up. But how did container prices almost quadruple in the price? The pandemic had a huge role in this. All of the issues that arose in freight can be attributed to the COVID-19 pandemic.
Some of the things we’d like to note are:
- lack of manpower during the pandemic
- difficulties due to lockdowns in various countries
- COVID regulations slowing everything down
So, now, if you want something shipped relatively quickly without stress, the price will be very high. There are so many regulations that need to be taken care of and they take a lot of time and resources. This is the biggest cause of freight prices changing.
COVID-19 has changed the way we consume goods
Under the pandemic, global panic has skyrocketed as well. Even people who were pretty easygoing have been feeling the stress and danger of getting sick. This has enormously increased the demand for shipping worldwide. Companies are running into issues trying to meet all of their demand and their timelines. They need a lot more personnel and vehicles. So, logically, the prices must follow suit.
Certain goods have been more sought out for than others. This means your company might have had an amazing work year, or quite the opposite. But the end result is the same and that is increased freight prices.
What can you do to protect your business?
Either you, your company or your consumers could be facing the repercussion of higher freight prices. And all of you would agree that this is something that is very much not needed. Running a business is hard enough on its own. No reason why you should suffer the consequences of something completely out of your hands. If you’re considering various warehousing companies Kuwait, be sure to give the extra effort and find the perfect one.
Plan out your shipments in advance
Now the focus is on getting your shipments to go through with little or no difficulties. By booking containers in advance you’ll always be able to finish everything in time. Another good thing to keep in mind is to have a general shipment plan set in motion. Know approximately when which shipment is due to be sent out and work around that. Now more than ever a good work ethic is absolutely essential!
Work with someone trusted and reliable
If you’ve been in the trade for long enough, we’re sure you have a reliable shipping company. If not, asking around your colleagues or people in the trade is the way to go. Our logistics professionals can be of help to you for forwarding services. What you should look for is someone who is trustworthy, straightforward, and very transparent in their communication.
Consider some different options
If you’ve been using FCL containers, now might be the time to switch to LCL. The cost is lower and, if the items you’re shipping aren’t breakable, this is the best option for you. With the incredible rise of sea freight, the difference in price between sea freight and air freight has never been lower. Even though air freight is still more expensive, for urgent shipments or bigger shipments, it can be a very good alternative.
When will freight rates return to normal?
Unfortunately, this is something no one can accurately predict. Some reports show that things might be calming down in 2022., but until then we’re all going to have to persevere and find good options to navigate the situation. It won’t be easy, but seeing how general demand is increasing, it will be worth it!
We hope your question of how did the freight rates change has been answered. For any help or additional information, feel free to contact us.