The changing business landscape indicates significant price changes in different sectors. Shipping and logistics expenses, for one, are expected to rise sharply in the future, and all leading cheap cross country moving companies’ businesses must prepare for this. Freight price increases may be traced back to several causes:
The European Union’s Mobility Package 2022
Modifications to the Mobility package (we informed here on the latest limits and when they come into force) are set to go into effect on various dates and are likely to impact transportation expenses significantly. The current one, which will take effect on February 21, 2022, will change cabotage laws, compel trucks to be returned to their country of registration, and establish rest rules for drivers. The upshot is that drivers now spend an average of just four weeks a year on the road.
In addition, freight forwarders cannot locate personnel, so waiting shipments get stale while vehicles sit idle. For this reason, freight prices have skyrocketed due to a severe shortage of storage space.
The Supply Chain Has Failed
Supply networks (and their resilience) were not something people often discussed before the epidemic. These days, though, disruptions in global supply networks only make matters worse for the transportation industry. Since the Suez Canal was sealed up in August of 2021 and major ports in China or elsewhere were closed due to a pandemic, there has been a severe backlog in the worldwide movement of commodities.
Up to one hundred container and cargo ships may be moored off the East Coast ports of the United States at any one time, and that doesn’t even include the ships in Chinese harbors. As a result of the persistent delays and cargo scarcity, shipping costs have increased.
However, there are still shipping companies that offer the cheapest way to ship containers.
Low Supply And High Demand
According to specialists in the field, freight forwarders have the leverage to boost prices when negotiating new contracts due to the strong shipping demand that continues to overwhelm the limited capacity in the freight sector. The logistics industry executives expect yearly contract rates to more than quadruple from pre-supply-chain capacity-squeeze levels. Several trucking companies predict that in 2022, contract rates will grow by double digits as a result of these expenditures.
When Do You Expect Shipping Costs To Go Down Again?
Many experts and import companies are anxiously awaiting the day when freight rates and shipping expenses will reduce in light of the present economic scenario. But where can I find the solution? Not anytime soon.
Despite the risk of delays and high shipping expenses, importers still have some choices. Currently relevant factors in the freight market:
- Finding the most reasonably priced transportation option is as simple as getting many estimates and weighing your options. Digital logistics systems allow for price comparisons to be made.
- In case of a sudden increase in freight costs or delays in delivery, you should plan for the worst.
- It’s crucial to have a plan B in case of unexpected setbacks, such as delays, greater expenses, or a lack of available resources.
Consider your alternatives for a warehouse to lessen the impact of decreased demand and other business constraints.
The Cost Of Oil Has Not Come Down Yet
Oil prices have risen sharply in recent weeks. Fuel prices will likely drop due to increased output quotas from OPEC countries. Countries throughout the globe have spoken out against this kind of action. The scenario in this very fuel-dependent sector will not improve in the next months. Diesel prices are 41% higher than in December 2020 due to the rising costs of oil and natural gas used to produce diesel. In most nations, new CO2 taxes will take effect at the start of 2022, adding to the already high diesel and petrol costs.
The Lack Of Available Drivers In Europe Has Worsened Recently
There is still a severe shortage of heavy-goods vehicle (HGV) drivers throughout Europe, with estimates placing the gap at 400,000 jobs. This includes a shortage of 80,000 drivers in Germany and 124,000 in Poland. Due largely to Brexit, the already severe driver shortage in the UK has become much more severe.
Keep an eye on sales figures to see whether a change in strategy is required. Remember to include shipping expenses when calculating potential profits.