Freight shipping costs have been increasing intensely since the spring of 2020. Various industry experts expect more surges in freight shipping costs in the first months of 2022. These surges in prices will impact overall freight rates. Along with higher transportation fees, companies should also expect to pay higher fees for –
- Cargo containers
- Customs fees on major trade routes
- Higher charter prices for container vessels
Due to these increases in freight shipping costs, many importers, exporters, and freight forwarders expect to lose business from quite a few countries. For example, freight costs to Europe have increased by 100% in the past year. The costs of 40-foot high containers have also doubled during this period.
Are there any signs of relief for importers, exporters, and freight forwarders in the short term? No freight rates are likely to continue increasing in 2022 because of various reasons such as –
Global Imbalances
In 2022, the recovery from the pandemic will progress even further. Global demand will be stronger, particularly in the sectors closely linked to global trade. That means competition for ocean freight capacity will increase. Shortages of empty containers will keep pushing prices up further.
The Lack of Alternatives
Currently, ocean freight is the only viable option for international importers, exporters, and freight forwarders. It’s hard for them to avoid surging shipping costs because alternative modes of transportation aren’t realistic options for high-value goods.
Poor Economic Recovery
Many countries are not exporting as many goods as they did before the COVID19. For example, US exports are not expected to recover completely to pre-pandemic levels. As trading countries continue recovering in 2022, competition for ocean freight capacity will exacerbate many issues. Issues like displaced empty containers will keep increasing overall railroad shipping rates.
Port Congestions
Shipping performances in 2022 will most likely carry on from where 2021 left off. Expect multiple canceled sailings, delivery delays, and port congestions. The COVID19 virus itself will keep causing disruptions at major international ports. For instance, China’s Yantian container port abruptly shut down in 2021.
How Can Freight Forwarders Tackle These Uncertainties?
The best way a freight forwarder can address these uncertainties in 2022 is by joining a freight forwarder alliance. Freight forwarder alliances are networks of like-minded professionals. Work with fellow freight forwarders to pool your risks and obtain better purchasing power. Some other perks of joining freight forwarder alliances include –
- Payment protection plans.
- Insurance on each order.
- Free marketing.
- Access to the latest industry information.
- Ability to network with fellow freight forwarders to maintain your competitiveness.
Perhaps the biggest benefit of joining a top-level freight forwarder alliance is tech assistance. Digitally focused freight forwarder alliances use integrated shipment management platforms. On these platforms, freight forwarders can access –
- Online booking or quotation tools.
- Up-to-date tools for tracking shipments, verifying their location status, etc.
- Tools for communicating and networking with other freight forwarders in the alliance.
Furthermore, freight forwarders can avoid the gigantic up-front costs of digitizing their operations. In this environment of uncertainty, access to the latest freight forwarding software tools can help you address major risks.
