Will Shipping Costs Continue To Rise, Or Will They Finally Drop?
Cargo Transport Fees
Transporting your goods efficiently can be a challenge, especially if it’s your daily task and primary source of revenue. A shipping container would be your best option, and it is an investment worth its price. Many companies are experiencing higher shipping costs to move their goods.
Transporting goods is the backbone of the supply chain, and the increase in these prices has resonated throughout the industry, thus increasing the cost of goods. Will the prices continue to rise or will they finally fall?
Factors That Affect Shipping Prices
Fuel, laborers, containers, demand, and supply are essential factors to transport goods effectively, and if their access becomes concerning, prices will undoubtedly be affected. Companies charging higher prices cover up increased expenses.
Consumers and businesses are both infuriated by the rising prices. Indeed, the government and its legislators will attempt to remedy this case, but they must first explore why these prices are rising so as not to create a new conflict and cause the costs to increase even further. So, why have shipping containers become more expensive lately? It is simply because of the relationship between supply and demand. Overseas carriers are raising prices due to increased demand and limited supply. In addition, fuel prices have rocketed, and production has been scarce, affecting companies’ ability to respond quickly to consumers’ needs; these are the causes of the rise in costs. Aside from these, companies are increasing paychecks to keep employees from resigning, hence another reason for prices to rise.
Post Pandemic Factors
After the global lockdown due to the pandemic, China was the fastest to reopen its economy. However, when China needed to ship its goods, the shipping containers they needed were stuck in Europe and the United States, causing a shortage of shipping containers in China.
The pandemic has significantly impacted the market throughout the globe. However, in the first months of 2021, demand for shipping containers has reached a record high of 229 ships with an overall load capacity of 2.2 million TEU. Once this new capacity becomes ready for use, it will project a six percent increase after two years of low deliveries. The scrapping of old vessels is not even expected to offset.
The world is still in the catch-up phase, recovering from the pandemic. As a result, the imminent increase in overseas freight capacity will pressure shipping costs but won’t immediately return shipping prices to their preceding pandemic levels. Subsequently, freight rates may continue to rise due to further increases in demand and the hindrance of a congested system. And even after the congestion hindrances are alleviated, freight prices may stay at higher costs than before the pandemic.
Port Congestions And Blocked Canals
In March 2021, an accident caused the price of shipping containers to rise even more. The shipping vessel Ever Given was stuck in the Suez Canal and barred the entire Canal for a week. 12% of the world’s trade goes through the Canal, and the incident roughly cost $2.2 billion to $3.9 billion in international trade because of the delays caused by it
. Although the Canal isn’t blocked anymore, the congestion caused delays for ships to their destination
s. Ports are already dealing with uncertainties in accommodating and dispatching cargo ships. Further delays from incidents like these put more pressure on freight rates.
These projections may impede your decision to purchase a shipping container, but don’t worry! At Used Conex, we guarantee you the lowest shipping container prices anywhere in the United States. In addition, if you can’t afford to buy one right now, you can also check out our rent-to-own options on our website at www.usedconex.com.