For every business, moving goods from one place to another remains one of their most important considerations. Either for transporting raw materials to process or distributing finished products to the market, logistics is a necessity. However, recent happenings have caused bumps in international shipments, particularly in terms of shipping costs.
The costs of having your products available at a specific location have risen a lot. While global container rates have taken a rough 40% notch down by July 2022 since their peak of approximately $11,000 in September 2021, shipping rates are to remain high due to various constraints. Continue reading to know why and how you can successfully navigate them.
Why shipping rates are on the rise
Aside from the modern pandemic that posed various health restrictions in cross-border shipping, other reasons why shipping rates have been elevated significantly include the following.
A shortage in shipping containers worldwide. While China had lots of goods manufactured at the beginning of the pandemic, the shipping containers used to transport them are stuck in the United States and Europe. With limited supply facing strong demand, rates are bound to get high.
Rising oil prices. The war on Ukraine led to sanctions and bans on roughly 90% of Russian oil imports, constraining the global supply of refined crude oil. Superimposed with the low oil production of the Organization for Petroleum Exporting Countries, prices are multiplied astronomically. The operating costs of goods transportation are thus affected.
Shanghai’s two-month lockdown. The city has imposed severe lockdown restrictions, limiting manufacturing capacity and logistics. Factories can’t get their raw materials from ports, and they also can’t bring their products to the ports with restricted land transportation availability.
Tips for getting valuable shipping quotes
Those are just among the many other reasons for shipping rates to stay elevated at astronomical levels in 2022. While international shipments may incur high expenses, there are some things that you can do to get the most out of your money.
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- Work with a freight forwarder.
Shipping service providers can be classified into many categories, such as logistics agencies, shipping couriers, freight forwarders, and more. A freight forwarder would be your best choice of a partner because of the following advantages.
- They are well-connected in the industry as they collaborate with various logistics service providers, shipping agents, and others.
- Freight forwarders often have extensive experience in the trade, allowing for smoother processes like customs clearances.
- Hassle-free shipments can be done because they’re responsible for bringing your goods around.
- A competitive freight forwarder has strong inventory management systems and may even offer you warehousing services. One good example of this is ZGGShip Freight Forwarder.
- Choose the right shipping method.
There are many ways that you can ship your goods internationally, including sea freight, air freight, express shipping, and rail transport. Determining which method to use in transporting your products is essential because the shipping mode highly determines your costs. Here’s a quick summary of their differences.
|GOOD FOR||Bulk shipments or shipping heavy equipment||Lightweight cargo||Urgent and time-sensitive deliveries||Eco-friendly and bulk shipping|
Consider your needs in terms of shipping load and time. Keep in mind that faster shipments require higher expenses—sea freight is typically the most cost-effective, while express shipping is the most expensive.
- Try consolidating your goods.
Every shipment incurs many costs that must be paid, including fuel surcharges, taxes, duties, handling fees, and many others. Shipping small loads frequently can be expensive, and one way you can solve that is to consolidate your cargo. Simply put, you want to combine many smaller loads into one big shipment.
If you are working with a freight forwarder, one goods consolidation option that you can try is Less than a Container Load (LCL) shipping. This method allows you to share the shipping container with other importers, making you responsible only for the amount of space that your goods take.
- Optimize your packaging options.
Packaging is just a small part of your shipping costs, but it has a significant effect on your expenses concerning warehousing and transportation. Most shipping service providers take into account the amount of space that your cargo takes inside a container. Hence, the bigger the packaging is, the higher the amount it incurs. Keeping your packaging options at a minimum would be a great way to save money on shipping.
- Avoid peak times.
The logic is simple: peak shipping times mean fewer shipping containers available. Hence, the rates for renting freight spaces can get really high with the competitive demand on the market. Whether you can successfully book them also concerns how powerful and influential your shipping service provider is.
While shipping rates are seeing a trend to stabilization, they have a long way to go before going back to previous levels before the modern pandemic. Being wise and circumnavigating the astronomical and still rising shipping expenses would be your best solution when it comes to moving your goods this year in 2022.