Rising Costs of Freight Shipping
Ever since the COVID-19 pandemic back in 2020, there has been a huge rise in shipping costs. This rising cost of shipping affects everyone around the world and makes it harder to get products. These rising shipping costs can be seen affecting many around the world in more ways than one, often in ways people are not even aware of. In today’s blog, these issues are going to be discussed and what it means for the world. Enjoy reading!
Do you prefer listening? Then try the Import Export Podcast with our teammate Lukáš Polame and co-founder of IncoDocs Ben Thompson where they discuss the rising shipping rates and what factors have contributed to this phenomenon.
It is not news that a good amount of products come from all over the world and are not isolated to just one country. However, what is interesting is that ocean cargo transport is responsible for around 80% of the world’s transportation traffic for traded goods. This being said, the prices to ship goods via ocean have been on the rise for years now and has surged rapidly with the onset of the COVID-19 pandemic. Also relating to the COVID-19 pandemic, port workers were at home sick and truck drivers could not get these goods across the land due to traveling restrictions being put into effect. Aside from health matters, federal stimulus programs gave money to the population in order to help soften the effects of the pandemic. This caused the demand for many products to surge which put increased demand on manufacturers who make these products as well as putting pressure on exporters to get these items to the consumer. Both of these combined caused a rapid onset of increased shipping costs as the industry struggles to fill in the demand. It also contributed to the creation of a shortage of containers.
It is time to mention some numbers to put these rising costs into perspective. Not too long ago, the cost to ship a 40-foot steel cargo container by ocean freight would be around two thousand dollars. Today in 2022, the cost to ship the same container costs over ten thousand dollars. The idea that something that used to cost two thousand dollars now costs ten thousand dollars within just a few years is mind-boggling.
Now consumers might think that these expensive shipping cost does not affect them since they are not the ones paying to ship the container, they are just buying a product. Well actually, consumers are paying for these rising shipping costs. The companies exporting their products are not going to absorb these rising shipping costs and lose their profit. Instead, they charge it directly to the customer. Of course, one consumer is not now paying over eight thousand more dollars for a product to make up the difference. The cost is broken into smaller amounts that each consumer pays when they buy something. This amount may not be immediately noticeable. However, it is definitely there and everyone is literally paying the price for it.
A more tangible example of this would be the cost of gasoline. In the United States, the cost of gasoline has dramatically increased within just a few months. The state of California (which is known to have the highest gasoline prices in the nation) has seen gas prices go from the low three-dollar range per gallon for 91 octane to now being around seven dollars for a gallon of gas at the same octane rating. Now you might think this could just be California politics, which in part is. However, in Texas (a state known to be the opposite of California in terms of politics), gas has gone from the two-dollar range to now being almost five dollars for the same gasoline.
To wrap this up, it is important to mention how people can navigate these shipping costs, especially those who are paying to ship these containers. Now has never been a better time to take advantage of a program that will help exporters save money when shipping cargo. This amazing program is EasyCargo. EasyCargo is full of great features to help exporters save money by letting the program calculate the most efficient way to load up containers. The program will also show how much of a certain item will fit into a container. There are many container options available to load and if there is not one that is needed, a custom container can easily be created. Be sure to check EasyCargo out today and take advantage of its great features. There is no commitment to try the program out and it can be tested with its 10-Day Free Trial. Let EasyCargo help combat these inflated shipping costs!