The one thing that is never constant in the shipping industry and concerns traders the most is – the freight cost! There are so many factors influencing the container freights and shipping charges that one cannot move ahead with a permanent plan. The heterogeneity and intricacy of the market do not give the space to traders where they can get that perfect ratio between costs and revenues. Therefore, the best thing one can do is keep an eye on the recent surges and fluctuations in freight rates. One can either keep surfing through news articles and updates or simply access the latest shipping blogs and journals of reliable sources. Some of the shipping service providers also offer this facility to help their customers get all the information in a capsule form!
Freight Cost Trends: The Latest Updates
Speaking of recent surges in 2020, one cannot avoid mentioning the impact that the COVID-19 pandemic had on the shipping industry. With the world suffering from the deadly virus, the import/export demand for medical equipment, certain drugs and ventilators was at its peak! This unexpected rise in demand created chaos in the market, leading to frequent fluctuations in the freight cost.
Most Noticeable Freight Cost Trends in 2020
- In March-April 2020, the air freight rate for per-kilo transportation from Shanghai to Frankfurt hiked up to 300%. The rates jumped from 2.46 to 9.64 US Dollars.
- The capacity of inland haulage also declined by as much as 35%.
- There was an increase in freight costs of 30-40% in October. By the end of the month, there is an increase of 60% to freight shipments to European ports and a 40% rise in the shipments to Latin American ports.
- The price competition between existing and newly developing carriers is increasing in the international market.
- The rising operational costs have forced shippers to think about better and more sustainable logistics strategies.
- The value-added services and technological advancements have also led to a change in the freight charges.
- The quality of services has become the primary point of concern for customers given there is a limited window to combat the frequently changing freight rates in the market.
How Can Traders Overcome the Consequent Challenges?
The traders and shippers had to take some time to read the market condition and get a hold of the freight cost while the situation across the world kept worsening. The impact of the pandemic is still fresh in the international shipping industry, implying the exporters and importers should start taking all the possible measures to overcome the constant challenges.
- Keep evaluating the world container index and choose the shipping route and type of shipment very carefully to decrease the freight cost as much as possible.
- Take assistance from a reliable shipping service provider who can offer a window to all the prevailing rates in the market from all the active shipping lines. The best one chooses, the higher is the possibility of grabbing the most profitable deal!
- Choose the type of shipment by analysing all the conditions properly. Do not let the market rush take a toll on the trade activities!
- Hire the best CHA (Customs House Agent) available who can get all the formalities done conveniently, given the customs department is taking a longer time than usual to deliver the “Let Export Order‘. Faster services will help cut the freight cost and channelise the resources in the right direction!
The increasing and ever-fluctuating freight and container cost is the primary concern of every trader even though there is no way to control it. Traders should always seek assistance from the best in the field whenever in confusion or doubt. A well-planned freight shipment will always yield positive output even if the freight shipment cost is not constant!