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How Will Rising Freight and Container Prices Impact Shipping Rates?

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How Will Rising Freight and Container Prices Impact Shipping Rates?

The headlines are full of news about how freight prices are becoming more difficult for logistics professionals and people in similar positions to manage. In many cases, there are knock-on effects for consumers who realize the things they used to buy regularly without issue are becoming progressively less affordable.

The rising container prices put extra strain on company representatives who notice how the ballooning costs impact shipping rates. Here is a closer look at this complex situation.

The Situation Will Impact Shipping Rates for the Long Term

People anxiously hoping for some relief from the current state of freight prices are probably out of luck. At least, that’s what the executives at numerous shipping companies expect. The specifics vary slightly in how long they think rising container prices will persist. However, the news isn’t good across the board.

One executive said people at his company anticipate this situation continuing until at least the first quarter of 2023. Another leader said people would have to get used to a new normal for the shipping industry, featuring more uncertainty, higher shipping costs and longer timeframes for goods in transit.

Some of the executives recommended charterers sign longer contracts with ship owners so the agreements would last longer. More specifically, they might stay valid for several years instead of remaining in effect for months. Agreeing to those extended contracts tackles the price volatility issue and helps logistics professionals rest assured regarding availability.

Numerous factors impact shipping rates and most are out of the direct control of the people they affect. However, some business leaders have responded to the matter by trying to do more business with local suppliers. When goods don’t have to travel as far and aren’t going across international borders, freight prices should be lower and it’s less likely the shipments will experience significant delays.

Logistics Professionals Will See Increased Freight Prices in Various Forms

Some people may get frustrated and feel there’s no rhyme or reason for the rising container prices. But, shipping companies have always based their rates on various factors. For example, courier rates are covering many of the least expensive parts of the shipping process. However, they can still represent a substantial amount when added together.

Many shipping providers also calculate export surcharges that customers must pay. After citing challenges associated with increasing costs for fuel, logistics and more, some have raised those by several hundred dollars.

People also must account for the overhead expenses that keep shipments moving from one stage to the next. Since multiple parties are often involved, the total costs can go up as executives from each company cope with their own progressively climbing prices.

The specific impact shipping rates have on business customers also depends on which methods those parties use to get the goods to their destination. Sea and air are the two main channels for international shipments. The rates for each option fluctuate frequently based on demand.

For example, when more customers want space on a ship, the rising container prices will mean people have to pay more to secure their spots. Those who can’t afford the growing costs will have no choice but to look for other options.

Some companies also charge lesser-known fees to seal or clean the containers customers use. However, as these rates increase, many providers post associated updates on their websites. Even though the information doesn’t negate the fact that freight prices went up, it gives customers time to adjust their budgets wherever possible, potentially mitigating some of the adverse effects.

Customers and Business Owners Alike Will Experience the Effects of Rising Container Prices

When people read about the current logistics landscape, it’s not always easy for them to grasp how the soaring freight prices will affect individual business owners and consumers. Most who purchase things at their favorite shops never think about rising container prices and may have a passing interest in what’s happening based on glancing at the day’s headlines. However, they’ll almost certainly notice the effects.

One thing to remember is the freight issues have already been disrupting timelines and budgets for months. Consider the experience of one seller of holiday goods. He said he paid as much as $22,000 per container during the 2021 holiday season. However, it was only $3,500 the year before that. When faced with such gigantic increases, many business decision-makers have no choice but to pass the costs onto consumers.

Inflation is a much-discussed topic these days and researchers found a direct link between inflation rates and freight prices. They took data from 143 countries while conducting the study. The results showed that when freight rates double, there is a 0.7 percentage rate increase in inflation.

When the researchers published the outcomes in March 2022, they concluded that the impact shipping rates have on inflation could result in an increase of about 1.5% throughout 2022.

They also noted that their research occurred before the Ukraine invasion but believed the issue would worsen global inflation. Various mainstream news outlets have also analyzed the ongoing supply chain issues. They found containers were often stuck at ports or quickly snatched up by the parties with the most financial resources to devote to the matter.

Some retailers also reprioritized what they sent through certain methods due to the rising container prices. For example, having soft items shipped often meant they could fit more per shipment.

Since some items take longer to arrive, customers also have to deal with the reality that they may not get the products in time for events like kids’ birthdays or religious holidays. The problem also affects manufacturers who need parts to build the most in-demand items.

Be as Transparent as Possible About Rising Freight Costs

It is now easier to see the impact shipping rates have on various parts of the supply chain. People familiar with the issue often warn there’s no end in sight.

If that’s the case, the best thing affected parties can do is try to control as many factors within their sphere of influence. Additionally, constant contact with customers about rate increases or delays will ensure everyone has the most accurate and up-to-date information.

 

ltl freight shipping

Benefits of LTL Freight Shipping

Less than truckload (LTL) shipping is a method of shipping that uses either LTL carriers or parcel carriers. The sticking point of this type of shipping is that it allows for people to put together their smaller loads (less than 150lbs, 68kg) and then ship them together with other people’s packages. This allows shipping companies to make shipments much more economically than with the FTL (full truckload) alternatives. But, besides economical benefits, there are other benefits of LTL freight shipping that you need to be aware of in order to incorporate it with your business. So, let us take a look at why LTL freight shipping is comparable and often preferable to FTL shipping.

Top Benefits of LTL Freight Shipping

The fastest way to ship your packages is to have a shipping company pick them up, load them and directly transport them to your desired location. Unfortunately, this is often the least economical way of doing it. In order to make shipping cheaper and more eco-friendly, shipping companies often have to use alternative ways of shipping. And one of the better ones is LTL. Even though it can be slower than direct FTL shipping, it allows for a much better cost and fuel efficiency. And, with modern technologies and regular use, it can be just as efficient as FTL shipping.

Shipping Cost

One of the largest benefits of LTL freight shipping is the reduced shipping cost. Since this method of shipping is based on smaller loads from various clients, it manages to reduce the overall shipping cost for everyone. This is due to the fact that by using LTL, shipping companies put together multiple smaller loads. By doing so they manage to reduce the fuel and the number of vehicles necessary to transport their loads. If they were to ship client by client, they wouldn’t be able to fill the vehicles to their maximum capacity (hence the less than truckload). But, by lumping up items together, LTL shipping manages to save cost on transport, while allowing the same service as FTL.

Eco-Friendliness

More and more companies are turning towards eco-friendliness as a necessary mode of operation. And, once you take a look at our current rate of climate change and our carbon footprint, you’ll also be hardpressed to look for eco-friendly solutions. Luckily, when it comes to shipping, LTL is one of the greener options. By reducing the amount of fuel and vehicles necessary for shipping, LTL allows shipping companies to be much greener. They are also able to figure out optimal pathways, due to more regular shipping that is common to LTL. So, if you are looking for an easy way to make your shipments greener, simply employ LTL freight shipping.

Increased Safety

The first way that LTL freight shipping increases the safety of your items is with ample packing. Companies like Triple 7 Movers will first make sure that your possessions are properly packed. Then they will repack them each time the total LTL shipment is altered. By reapplying protective covers, they ensure the safety of your possessions from both physical and environmental harm. Individual loads are usually either packed on a parcel and then secured, or the company puts them in protective containers. This allows for maximum safety during shipping as well as easy handling.

Another safety feature of LTL freight shipping is that there is almost no chance of a package getting misplaced. By using tracking technologies, safety measures, and notification requirements, moving companies ensure that any package on board is well looked after. Furthermore, shipping companies usually organize LTL shipping routes with as few stops as possible. This allows them to keep packages safe for the entirety of the trip.

Better Organization

The biggest worry people have about LTL freight shipping is the supposed lack of availability. After all, with an FTL, you have the control of timing and the necessary route. Meanwhile, the LTL shipments are often limited by their route and the necessary drops. So, can better organization really be one of the benefits of LTL freight shipping? Well, as it turns out, it can. LTL freight shipping is ideal for customers who have regular shipments. Shipping companies often group up regular customers together. This allows them to achieve a greater degree of reliability and consistency. Along with regular shipments, companies also use automation to figure out optimal routes.

But, the true beauty of modern LTL freight shipping is that you don’t have to rely on your shipping company’s skills alone. Modern technologies allow clients to track their packages and get live notifications of any delays or setbacks. Therefore, with LTL freight shipping, you should be able to run your business and both send and receive your shipments with a high degree of reliability.

Shipping Options

Most shipping companies offer various shipping options. These options can come at a higher cost, but they can also make your shipping much better organized. Some of them are:

Expedient shipping – You can use this option if you want your goods to arrive faster than standard transit time. This option can often be quite costly, but it is quite useful for emergency shipping.

Liftgate – Does you freight exceeds 100 pounds? Then you should opt for Liftgate. Also, consider using it if the receiving location doesn’t have a clear dock for shipments.

Limited access – You can use this type of LTL for areas that have limited access due to safety reasons. So, for your construction sites or rural locations, you would probably want to choose this kind of shipping.

Custom delivery window – If you need your shipment to arrive within a specific period, you can opt for custom delivery windows. Most companies will deal with your package so that it fits their workload. This allows them to deal with transport cheaply and efficiently. So, this option can also be costly and should, therefore, be used with ample forethought.