Why you should prepare for high freight rates in 2022

The shipping and logistic industry has gone through one of the most difficult years in history. The year 2021 and the COVID pandemic have had an impact on many companies. Week market and supply chain were disrupted by many unforeseen events. Yet, the industry prevailed, but the question remained- how to prepare for high freight rates in 2022? Many freight forwarders in Kuwait are already taking the first steps. Keep reading if you want to learn more about how the industry is fighting these challenges.

Review of 2021

The previous twelve months have been difficult on many. The industry was hit hard and it was affected by numerous different factors. Of course, the pandemic of the coronavirus was the number one issue. The flair-up impacted many ports, causing them to close, or to lose their workforce. Therefore the waiting times have increased. Only 15% of ships have been on time. This caused massive market congestion. The trucking industry is experiencing delays and shortages of employees.

Containers and an airplane
Freight forwarding and logistics had a high impact, so preparations and planning for the year 2022 must commence

During the year 2021, rates reached $12,000 per FEU. They are predicted to be growing in the year 2022. A number of shippers found that their allocated volume wasn’t available at times throughout the year, even when some contract rates were held. The industry was faced with equipment shortages, alongside low factory capacities. Therefore, Easy Move Kuwait found ways to fight challenges that are to come:

  • prepare for high freight rates in 2022 by finding creative solutions
  • utilize globalization process, and look for new changes in  global trade
  • don’t disregard the use of new technologies

For the international supply chain, there was a specific difficulty that occurred, and that was the Suez Canal crisis. A total of 300 ships were stopped, the merchandise was delayed, and equipment shortages in Asia were worse than ever. We have a lot to learn from unforeseen events. It will probably take a long time for freight rates to return to normal after the 2021 all-time high. During this time of rising ocean freight costs, certain goods will likely be more expensive. Everything above must be taken into consideration in order to properly prepare for high freight rates in 2022.

Two man standing in front of trucks
Careful consideration of challenges in the previous year must be taken in order to prepare for high freight rates in 2022

Expectations for shipping in 2022

Rates and demand are likely to remain high through 2022. The impact of the pandemic will stay strong for many years to come. This is a new reality that the world faces. It will be hard for the industry to recover. As an example, the automotive industry is experiencing delays due to chip shortages and this is impacting car production. Shippers will need to focus on developing positive relationships with their supply chains in the coming year.

Warehouse operations depend on visibility into the supply chain. To adapt their businesses to the unprecedented conditions in the warehouse industry, warehouses must find new ways to optimize their practices. To find companies that can successfully adapt to the changes, check out warehouse Kuwait and see what you can expect, as a top-quality storage solution.

How to prepare for high freight rates in 2022

Prepare your supply chain for 2022 by considering different modes, trade lanes, and central transit options. Companies will need to find creative solutions. Even if you cannot transport all of your freight by air, air freight remains the fastest way to refill your inventory. Keeping cargo moving can be made easier by prioritizing specific freight. Consider LCL shipping as a strategy. Typically, a less-than-container load is easier to find. In your case, you are only interested in some container space, not a whole container.

For heavy equipment movers, they will need to get creative in finding better ways to prepare for high freight rates in 2022. Even with using LCL, they will not be able to avoid congested ports. This is the reason why many ocean freight companies are not using port-to-port transport. Instead, they use interior-point intermodal.

Prepare for high freight rates in 2022 for ocean shipping
Ocean freight costs are likely to rise, which will increase the cost of certain goods

Globalize to prepare for high freight rates in 2022

Despite the ongoing congestion and shortages across all modes of transportation, one area where you may be able to save is in your global trade strategy. Trade policies are unique to each country and can change over time. Your trade advisor should meet with you regularly. Firstly, by analyzing your total costs and import costs, you can break through the complexity. Secondly, you will identify potential duty recovery opportunities and reduce your duty exposure through trade agreements.

The main transport of goods in the world is ocean shipping. More than 90% of merchandise is moved on the water. Companies should utilize these facts and make the most out of global trade, both with being fair competitors and providing quality services. This will bring lower prices and could end up with lower goods prices also. All stakeholders, logistic companies, and consumers can benefit. The industry must work together towards the same goals. Before you prepare for high freight rates in 2022, consider making changes in your own rows to contribute to the industry.

Use of new technologies

The past year has produced plenty of unique situations, and 2022 may be no different, but historical data can still be useful for finding solutions. Identifying trends in your data can give you the information advantage you need to make better supply chain decisions. Additionally, You can also make adjustments with the right technology tools that provide visibility and predictability.

The ability to see changes in real-time gives your team and customers the chance to react and adjust strategies as needed. New technologies can also apply to green shipping. This could bring an increase in freight rates, but in long term, this could mean that shipping and logistics will utilize fewer pollutants. It can bring many benefits to the industry, but it’s definitely one of the things to be on the lookout for and prepare for high freight rates in 2022.