Why the cost of the product will become more expensive, this is one reason
Sea Freight Rates Have Soared 300%. In this article, we’ll look into why sea freight rates have soared in 2021 and what you can do to keep your business afloat.
How Much Have Sea Freight Rates Increased?
The Freightos Baltic Index pegs the market rate for a single 40’ container at a little over $4,000—nearly quadruple what it was a year ago.
Prices for a single 40′ container have nearly quadrupled from last year.
This unprecedented spike in container prices has caused delays for online retailers trying to import high-demand goods from China.
It’s doubly worrisome because about 60% of all global goods are shipped by container.
Of course, this whole price hike affects all industries that ship goods, but some analysts say that e-commerce and Western consumers may bear the brunt of it, mainly because most e-commerce sellers in North America and Europe deal with Chinese suppliers.
Why are Sea Freight Rates so High in 2021?
Surprise, surprise. The pandemic that brought entire economies to their knees has a hand in this fiasco. But it’s actually more of a confluence of factors that COVID kicked off.
Here are a few of our culprits:
· Lockdown restrictions slowing down global trade
· Trade imbalance between China and the West
· Trade tensions between China and the West
· Lack of manpower due to the pandemic
· Big shipping firms taking advantage
What You Can Do to Protect Your Business
Again, e-commerce sellers may bear the brunt of the increased sea freight costs, and perhaps some of it could be passed on to consumers. Either way, it’s bad for business.
Here are a few things you can do to protect your business:
· Plan out your procurement process
· Work with a reliable freight forwarder
· Consider alternatives if it makes sense
Working with a reliable freight forwarder can work wonders for your shipping process.
When Will Sea Freight Rates Go Back to Normal?
The short answer is nobody knows. Matter of fact, no one is sure if it will normalize at all.
Some reports say that there may be no easing until Q2, which could sound like ages if you’re in e-commerce, especially if you’re shipping fast-moving products that are in high demand due to the pandemic.
Others say that the container shortage will likely last longer into 2021, despite a lot of carriers recently placing new orders for containers.
This whole sea freight rate fiasco doesn’t seem to be going away any time soon, and we are all on the same boat.
Understanding why sea freight has become more expensive and a lot more complex will help you prepare and plan out your procurement more effectively.