Shipping costs have risen sharply over the last 12 months, leading to additional expenses for businesses who import and export goods.
Global freight shipping costs have been increasing since the second half of 2020. One of the main reasons for this rise has been the Covid-19 pandemic, which has restricted the movements of both cargo ships and aircraft, reducing the international freight capacity available.
With limited space in freight containers, the demand has risen higher than the supply, allowing companies to charge more for their shipping services. And an explosion in online shopping, prompted by the closure of physical shops during lockdown, has meant that there is more demand for international shipping than ever before.
Global shipping firms have quite simply been unable to keep up with this demand, leading to delays in items making it from manufacturers to retailers and from retailers to consumers.
There have also been issues with the cost of shipping itself as oil prices have increased since the start of the pandemic. Measures brought in to stop the spread of Covid-19 in the main oil producing nations have led to a reduction in oil production all over the world.
Although production has started to increase again, it still hasn’t risen enough to meet demand, leading to a steep rise in the cost of fuel. This has led to higher operating costs for global shipping firms, leading them to charge more for their services.
Another factor in the rise in international shipping costs is a shortage of containers. The manufacture of shipping containers slowed considerably as a result of the pandemic and although production has now picked up again in many places, it has been extremely challenging for companies to tackle the shortfall.
But it hasn’t just been the containers themselves that have been in short supply. The shipping industry has also been struggling with a shortage of the vessels themselves. Production shutdowns have resulted in fewer ships being built.
Pandemic lockdowns have had a lasting impact
It is estimated that the closure of fabrication yards and shipyards in the first half of 2020 will continue to have a knock-on effect on the number of new vessels until 2023. With high demand for international shipping, increased costs and fewer ships and containers available, it is no surprise that businesses are being asked to pay premium prices to send their goods overseas.
It isn’t just sending goods by sea which has become more expensive, air freight has also been affected. The aviation industry was hit hard by the pandemic with restrictions on international travel leading to far fewer flights and therefore less capacity available for cargo.
Air freight capacity is not expected to return to normal levels until at least 2023, meaning businesses are likely to have to get used to paying high shipping costs for the foreseeable future.
While the Covid-19 pandemic has caused issues with international shipping all over the world, businesses in the UK were already facing increased costs due to Brexit. When the UK left the European Union, it had to give up the benefits of EU membership, which included the ability to transport goods between member states without needing to pay taxes, duties or customs charges.
Now that the UK is outside the EU and no longer a part of the Single Market or Customs Union, any shipments from European countries are viewed as international and this has increased the cost. There has also been an increase in the paperwork required for goods travelling between the EU and UK.
If you’re a manufacturer or retailer in the furniture or homeware industry and you’re concerned about high shipping costs, AP+ may be able to help. We offer end-to-end third party logistics (3PL) solutions and can help keep costs down while also minimising the risk of delays.
We can arrange international shipping on your behalf, securing lower rates and ensuring all your paperwork is completed correctly so there are no issues with customs.
One way of getting around the issues related to high shipping costs is to plan your shipments in advance, ordering higher volumes of stock than usual so you can fulfil your customer’s orders. AP+ can store your stock in our purpose-built warehouse, which has 300 sq ft of storage space, and then fulfil your orders and send the goods directly to your customers when they come in.