After the dramatic changes in logistics in the past two years, the question is will ocean freight rates continue to rise. Due to limited storage space, jaw-dropping freight rates, truck shortage, and port congestion, rates will change. You should not forget the most considerable misfortunes in the Suez Canal blockage caused a loss of 9.6 bn USD in international trade. However, rates will increase, but it will not be significant as we are afraid of. For professional shipping and logistics companies, rising rates are not a big surprise, and they will adjust to that change.
Will ocean freight rates continue to rise?
It is not easy to predict future freight rate changes, especially not in the long term. With difficulties in energy and economic crisis, something will surely change. The only we can do is follow the changes and adapt to them.
More spots on ships
One of the ways to avoid increasing crises is to allow more spots on the ship. As the troubles in August 2021 delays caused the transport capacity to decrease by over 12.5% of sea transport, the situation must change. Air freight to Saudi Arabia will be significantly cheaper if rely on fewer ships and more space on one ship.
Packing is a huge problem when organizing shipping, which is why ocean freight rates will continue to rise. Therefore, packaging companies in Jeddah have changed the policy and some details.
- They added more boxes and more containers to their ships will increase export by 2-3%;
- Companies will be forced to use more ships for ocean freight Saudi Arabia
- Along with the details above, companies will increase the number of ports for easy access and communication.
Freight rate forecast prediction
It is hard to predict how much rates will increase in the future, but some signs will show how high they could be. Some experts predict a drop in the price of 30-40% by the end of 2022. However, it will hardly come back to the 2019 level.
Shortage of stuff
One of the biggest problems when ocean freight rates rise, is the need for more stuff. Shipping, though, demands a lot of people and workers in different spots. They need people in the vacancy chain, warehouse managers, operatives, the truck drivers. Unfortunately, the situation will hardly be better shortly.
Raising fuel prices
It is not easy to talk about the rising prices in ocean freight without mentioning and considering fuel prices. As transportation runs on raw materials, oil’s cost significantly affects transportation’s price. Business relies on logistics and transporting, which can increase the price of fuel by 74%. Although companies have calculated that emptying the trucks will lower costs, it will not significantly change the final bill. The reason is higher fuel spent due to heavier vehicles. Companies now consider changing the routes and savings on other parts. However, it is for sure that the question is not will ocean freight rates continue to rise but how much.