Whether you are a business owner or just a consumer, there is no one who did not notice a sudden spike in the price of shipping and freight costs lately. Although time passes, there is one question that remains still and many can’t find the answer. The question is why shipping was so expensive in 2021? And the next question is should we expect high freight rates in 2022? The right answer to both questions is in the world’s ongoing nemesis: COVID-19. The pandemic affect our world so hard and everything started to change. Some things are possible to fix and these things could be very similar as they did before. On the other hand, some things are remain changed and we will need to get used to them. Our custom clearance and freight forwarding experts will help you understand the situation with freight rates. Let’s see what to expect!
Reasons why we should expect high freight rates in 2022
It is a fact that freight rates have risen sharply and competition for ocean freight capacities becomes something normal. Whether you need container shipping from UK to Saudi Arabia or anywhere else, you will need to pay more than before the pandemic. If you are still wondering why to expect high freight rates in 2022, here are the things that will help you find the answer.
The main reasons for the high freight rates are:
- Global shipping container shortage that has changed shipping costs;
- Port congestion and closures that keep creating delays;
- Deployed and canceled shipping capacities;
- The Suez Canal Accident that happened in March 2021;
- Issues that major ports in China are facing;
- Just a few alternatives to ocean freight.
Although it is not easy to get used to a lot higher freight rates, there are so many signs nothing will change soon. Moreover, there is no even short-term relief in the months to come. The hardest thing for every company who needs to transport its goods is to find a way to overcome financial difficulties. Even though this task is not easy at all, our Four Winds Saudi Arabia encourages you to keep fighting for finding ways to take your business finances under control. If you want to stay in the game, you should know the world should expect high freight rates in 2022. So, do not plan any savings when it comes to transportation costs. Instead, find other ways to improve your business and increase your profits until we all get lower shipping and freight costs.
Reasons for global imbalances that affect rising prices
The strong impact of the pandemic did affect all aspects of our lives. But that is not all, it affects the world’s trade, disturbed flows of international transportation, affect logistic companies in Saudi Arabia and over the world. Numerous lockdowns did change demand for products and goods worldwide. That what the thing that has a strong impact on production flows. The countries continue with locking down and opening up but at different times. On the other hand, shipping companies cut the capacity on major routes. Shortages of empty containers become a large issue to face with. After this recovery did start to progress and global demand for goods has recovered strongly. This was especially related to those sectors which are most closely linked to global trade in goods.
The result of all mentioned changes that pandemic was initiated is a competition for ocean freight capacity. This competition has become stronger as economies open up additionally and inventories are rebuilt across the several links of supply chains. That was the moment when international shipping costs has changed significantly. Changes in costs for cargo transportation KSA were the only way for transportation companies to survive. After they face products stuck in warehouses, so many changes in deliveries during the pandemic, they had to suffer many losses. And the recovery from losses in the first-period pandemic requires more income when it comes to transportation services. This is one of the reasons why we all can expect high freight prices in 2022.
Few alternatives to ocean freight are why to expect high freight costs in 2022
As you already know, ocean freight is the most affordable method of overseas transportation. When you hire our sea freight KSA services, you will get cost-effective services. Your goods will get to the wanted destination safe and secure. Unfortunately, as well as the rest of the world, we also need to accept changes in the terms of prices for ocean transportation services. And if you read the reason above once again, you will realize the is nothing that we can do to change this, as well as the rest of the globe.
What we can do is to offer you some alternatives such as ground transport or air freight. However, you need to know that capacities when it comes to alternatives are currently limited. Unluckily, also tariffs have spiked as well. All this makes high transport costs hard to avoid. Although you will deliver your products faster if you opt for air transport, remember to be ready to pay higher costs. But if demand is high, you could not risk and keep your customers out of products they want. In the end, you will need to opt for any type of transportation that will enable you to deliver products to final consumers. Because if you don’t you could lose your customers forever.
The turbulences that we all face when it comes to global transportation are disturbing for many, especially small businesses. And there is no sign the situation will become better just over the night. It does not matter if you need to deliver your goods to the UK, the United States of America, or anywhere else, sooner or later you will need to choose the most affordable transportation method you could find currently. Although you can expect high freight rates in 2022, we hope you will overcome them. We genuinely wish you run a thriving business no matter the circumstances!