How do rising freight prices impact shipping rates?

Soaring prices are the subject of much discourse lately. All over the world, news anchors are discussing the constantly elevating food, energy and fuel costs. Many people feel the brunt of these changes, with many worrying they won’t be able to pay for utilities in the upcoming winter. One of the aspects that are not discussed quite as often, however, is escalating freight prices. These extra costs are becoming increasingly burdensome for logistics professionals to manage. One of the most obvious effects is that the prices on the shelves are now much less affordable than they used to be not long ago. And while the individual consumer is affected by seeing how they lose buying power, for companies, rising container prices mean shipping rates and sales are impacted.

Let’s have a closer look at this complex situation and see precisely how freight affects shipping rates and how long these changes are expected to affect the market.

A long-term situation 

While it’s a good thing to be optimistic and see things from a sunny perspective regarding the finances and the economy, being realistic is the preferable option. And the facts point to the situation not letting up anytime soon. While the specifics vary across industries, one thing’s for sure; rising container prices are going to persist. As such, the news isn’t very encouraging across the board.

Opinions vary on how long this situation will last, with some executives anticipating it to continue well into 2023. Indeed, quite a few voices are proclaiming that since nothing is going to change anytime soon, and things may actually get worse before the proverbial light at the end of the tunnel shows up, the best course of action is to accept the current prices as they are and embrace the uncertainty. This is the best way to stay prepared in the current economic climate and not be deterred by the changes you notice daily that only seem to take a turn for the worse. A realistic view also helps provide some much-needed perspective so you don’t continue comparing the current prices with what they used to be last year or even before that.

The solutions 

When there’s an uncomfortable situation in business, entrepreneurs try to solve it to the best of their ability. That’s because any issue has the potential to severely impact operations and is, therefore, best remedied as soon as possible. In the case of container shipping costs, however, most of the factors are out of the direct control of the people they affect. As such, there’s not much that business owners can do, and customers have even less of a say.

Nevertheless, there are a few things that can be done. Some company leaders have decided that one of the best things to do given the situation is to shift business towards local suppliers. It’s a natural, logical response since goods not having to travel very far, often across international borders, to reach their destination means freight fees are also going to be significantly lower. A further advantage is that there’s a reduced likelihood of delays.

It’s also important to carefully choose the company that’s going to help you with your company shipping requirements. You can click here for more on the rates for container shipping. The fees will naturally differ depending on the destination port and the amount you’re transporting. So, for example, shipping a 40ft container to Los Angeles in the United States can be up to $3,866, while the same size container set to reach La Guaira in Venezuela is going to raise up to $5,421 in fees. Costs are generally lower in Europe, with prices for 40ft containers averaging $1,500 for cities like Rotterdam or London. Shipping a 20ft container can come with costs as low as $967.

Prices are generally steeper for Africa and Oceania, with smaller freight containers amounting to rates of $4,299 in Cape Town and $5,117 in Mombasa. In Asia, prices are relatively even, with Tokyo and Shanghai registering $2,141 and $2,161 for smaller intermodal containers and between $2,519 and $2,543 for the larger variants.

When you’re working with a specialized company, you’ll also get a better idea of what you can exactly fit into a container depending on the size and how large you want the load you’re transporting to be. If you choose to transport goods with a less-than container load, you will typically have to share the space with someone else. This translates as reduced costs because you only have to pay for the amount your items occupy. The main downside, however, is that goods typically take longer to arrive. In the case of a full-container load, you have to pay the full fee yourself, but the process is faster, and you don’t have to concern yourself that delays are going to affect your entrepreneurial reputation.

The bottom line 

Freight costs will continue to climb over the next period, and a decrease is not expected anytime soon. Estimates look pretty bleak, so if you’re a business owner, you must be transparent about these issues. Since costs affect all areas of the supply chain, being upfront with your clients about what they can expect from you guarantees you’re going to keep your clients loyal.

Most customers are likely not going to be interested in the intricacies of shipping costs and supply rates, but they’re definitely going to notice the difference the next time they step into their favorite store or require a service. With the holiday season fast approaching, prices will likely soar even higher since this is one of the times when people shop a lot. Some retailers have come up with different plans to reduce fees. For example, shipping soft items all at once means they could fit more per shipment. Nevertheless, given the current situation, there are also bound to be some delays, so customers should be advised to start their holiday shopping earlier than they usually would.

The most important thing is to do your part and don’t neglect your responsibilities towards your customers. Until things start looking up, make sure to maintain constant communication regarding changing prices and any likely postponements so that everyone has access to the most accurate information.

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