We are all feeling the pinch from the rising cost of living, but how is the increased shipping costs affecting businesses? The issue started as a result of Covid-19 as the global supply took a hit, and no one knows when things will get back to normal. More than 80% of global trade is done over ocean freight, but due to a 600% price increase of shipping costs companies are looking for alternative transport methods. According to CNN Business, a 40 foot shipping container in 2020 would cost around $1,920 whereas now, for the same container, it will cost over $14,000 due to a global shortage of shipping containers as demand picks up again. China reopened for business sooner than the US and Europe, however the shipping containers needed for China to ship goods were stuck in these regions as they were in lockdown which led to the shortage of shipping containers in China. In January, Mark Yeager of Redwood Logistics commented: “There are about 180 million containers worldwide, but ‘they’re in the wrong place.”
Another factor that contributed to the surge in shipping charges was the The Suez Canal Accident which blocked the entire waterway for a week after running aground and becoming lodged sideways. The Ever Given (ship) is 400m-long (1,312ft) and weighs 200,000 tonnes, with a maximum capacity of 20,000 containers according to the BBC. 12% of the world's trade goes through this canal, this incident cost around $2.2 billion to $3.9 billion in international trade due to delays. Rates for vessels transiting the canal were increased by six percent beginning in February 2022.
Shipping costs are a huge factor when it comes to inflation, when freight rates double, inflation picks up by about 0.7 percentage point. Rising shipping costs affect inflation in some countries more than others, depending on how much consumer goods they import.
In the last 7 years, we as a company have never seen our stock sell so fast. Due to shipping costs soaring and a shortage of goods, purchasing domestic stock for a lot of companies has become the best option. If you are looking to avoid shipping costs and find affordable clearance stock, join our mailing list by emailing info@anystockbuyer.com stating ‘add to mailing list’. No only does buying from us (in the UK) avoid shipping costs but you will also save money on every item, we only purchase clearance, liquidated, short dated etc stock which means everything is below wholesale price.
Other ways you can avoid paying these costs is using air freight which is a much faster option. Although air freight was generally seen as a more expensive form of transport, with shipping costs being at the rate they are, this may be the best option. Although you may not be saving much money, you can be guaranteed your goods will be delivered much sooner. Another way to avoid these costs is to move your manufacturing locations. China is the manufacturing powerhouse but recently it has become the shipping bottle neck. Companies should look to outsource their manufacturing outside of China, closer to primary markets. Other ways to avoid the high costs is to reduce shipping distance if possible, the shorter the journey for the shipping container, the cheaper the cost. Also when packaging your goods, ensure the box is the right fit for the item, if you have a box that is bigger than the item it can lead to larger dimensional weight which will lead to more expensive shipping costs.
Although it is uncertain when shipping prices will go down, it has been said by experts that there should be a drop by 2023. Until then, follow the steps on how to avoid shipping costs, there are more articles online that focus primarily on this. If you are looking to increase sales in general to generate more cash flow to keep up with rising costs, check out our other blog ‘How to increase retail sales’ for some tips.
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