Shipping costs have skyrocketed since the pandemic started. There is now a vicious competition going on for freight capacity. And that has become the new normal, and it will probably last. Companies like Four Winds Saudi Arabia has faced a lot of challenges trying to overcome the issue of higher shipping costs. The new capacities that are being put to use can not make a big difference. Shipping costs will remain high this year, and they will continue the trend into the next year. There are factors that will affect shipping costs in 2022.
What will affect shipping costs in 2022
The factors that will affect the shipping costs in the next year are the same ones that have also caused problems for import export companies in Saudi Arabia during this year. Read on to find out what those reasons are.
Global imbalances
The persisting problem from the beginning of the pandemic was the imbalance between the production and the demand for goods. This happened due to:
- counties locking down
- cut capacities on main routes
- a small number of empty containers (shipping costs in 2022 will remain high even if this gets fixed)
Logistics companies in Jubail, amongst others, have suffered greatly because of this. The supply and demand mechanism is recovering slowly and steadily, but there are still problems. Competiton for freight capacity has intensified because of economies opening up and going back to the pre-pandemic state.
An unstable recovery during 2021
Some countries are exporting more goods than they even did before the crisis started. In the meantime, the export of other countries lags behind in output. Even with the recovery progressing, there is still competition for freight forwarding containers. Because of this, the imbalances will progress into the next year.
Port congestions end in delays
Even when there are a lot of cancellations, delays also play a big role in creating a problem. Same as in 2020, the standard for this year has also been vessels not following the schedule. There are some signs of hope that the performance will start to improve soon due to the average delays being improved. Even with this, performance is the lowest it has been in the last ten years.
Unexpected occurrences
The pandemic is still leading to unexpected events, like the sudden closing of the Yantian container port in June. Operations have resumed but congestions and the use of measures against spreading the virus still cause problems. Even with the vaccination program being carried out, immunization will take time. When there is a long time, there also are opportunities for a lot of unexpected things to happen.
What will affect shipping costs in 2022 – conclusion
Shipping costs in 2022 will probably remain high due to the combination of increased demand and a congested system. And even with the capacities issues solved, there will still be a big chance that the freight rates will remain higher than before the pandemic.
