Key Points:
- Between China and the UK, the cost of shipping has gone up by over 350% in the past year
- The average price worldwide to ship a 40-foot container has quadrupled from a year ago to $8,399 as of July 1
- This price surge has imparted all goods by sea, truck freight, and other major trade routes
The cost of a shipping container has been up 80% since November 2020 and has tripled over the past year. Since the pandemic, global trade has experienced a significant shift, not just in North America. This setback has also led to the global shortage of shipping containers. Plus, there’s a high demand for goods despite the disruption of the global supply chains and trade channels.
Unfortunately, the skyrocketing container prices have imparted all goods by sea, truck, freight, and other major trade routes. Inevitably, this causes shipping delays, and the effects are taking a toll on both customers and shippers. As a result, many shippers are also faced with passing the high costs to their customers or retreating from overseas markets.
In this article, we'll walk you through the factors that have necessitated the increase in shipping prices and give you helpful tips and how you can handle the shortages of shipping containers in this supply chain crisis.
Table of Contents
Why Are Shipping Containers So Expensive?
Following the recent lockdown and the high demand for consumer goods, it is inevitable that the shipping costs for metal boxes would surge. But prices don’t increase on their own accord, and other factors must have contributed to this drastic increase. They include, but are not limited to the following:
Labor shortages
The scarcity of workers to load and unload a ship at ports and warehouses and truck drivers to transport them has stranded a lot of containers around the world. This shortage has inevitably caused a surge in price for shipping companies because both companies and port authorities have to operate with lower labor capacity.
Port closings and openings
With the pandemic and lockdown restrictions, global trade witnessed an imbalance. In addition, unexpected events have intensified trade headaches, like the Suez Canal blockage or the coronavirus outbreak that forced China to close its massive Yantian Port. Apart from this, many other ports were forced to close and open irregularly based on their country's restriction policies.
Port congestion
With a labor shortage, workers come from a highly congested shipping port. In addition, the ports are jammed with cargo ships with less space to accommodate them all. For example, the Port of Los Angeles faced major port congestion, especially for international trade.
For example, cargo ships that were already en route out of Asia dropped off hundreds of thousands of containers full of goods and raw materials in ports across the Americas—but because of pandemic restrictions, they couldn’t load those containers back up with new products to send back to Asia. So instead, the containers piled up in ports and unalterably led to the hike of making new containers.
Shipping containers are in short supply
With the global pandemic worsening, China's massive manufacturing sector shut down. With containers piled up at major import centers, their supply reduced drastically at principal export axes.
Plus, the demand for goods has dramatically increased with the holiday season. Containers, on the other hand, are in short supply, even during the holidays. Companies, therefore, have to ballot for the available containers. When demand is relatively higher than supply, prices for shipping services will skyrocket.
How Much Does Shipping a Container Cost?
According to the Freightos Index, the median cost of shipping containers from China to the United States hits $20,586. Freight rates have nearly double what it costs in July and four times in January for transportation services.
Tips for Handling the Shipping Container Shortage
The cost of shipping containers overseas may have soared, but that doesn’t mean there aren’t ways to deal with the current dilemma. Here are some tips to deal with the surging shipping costs during the Covid-19 pandemic.
Be fully communicative with customers
The continuous delays at ports have resulted in a backlog of products delayed to be delivered. It takes time for a container to move on to its next destination.
Customers can get agitated if they are not getting their goods at the expected time. Therefore, companies should take it upon themselves to follow up with their customers with real-time notifications.
Build shipping delays into delivery lead time for customers
Customers appreciate honesty, and they are at rest when you are honest with them. As you become aware of the consistent delays, adjust your delivery time with them. For example, if it usually takes you seven days to deliver and you know it is no longer feasible, try adjusting the delivery time to suit the current changes.
Offer full cost visibility in checkout
Complete cost visibility helps establish trust in your business. In addition, it affords customers real-time access to the tracking of shipment to know the progress, consequently ensuring you stay competitive among others. Therefore, offering full-cost visibility at checkout is handy.
Offer shipping insurance
Shipping insurance provides maximum protection against lost, stolen, or damaged packages. Unfortunately, the loss can be likely due to the current delays and port congestion.
In most cases, you’ll be reimbursed when your package does not reach its destination or if it is damaged by using shipping insurance. So when you deal with high orders and volumes, your goods are at an increased risk of getting lost or damaged.
Fortunately, Easyship offers up to $5,000 of shipping insurance for customers, so all your high-value items can receive the coverage they need.
Offer 24/7 customer support
With the shipping shortages in the current global economy, eCommerce merchants should try as much as possible to avoid delays, most especially by staying in touch with suppliers. However, situations can often go beyond control, and the only bailout is to keep in touch with customers. This will keep you in their books as they are kept abreast of whatever crisis is going on at the moment.
Easyship Helps with Shipping Freight Containers
The recent lockdown came with aftermaths that affected global trade, most especially international shipping. Ports’ continuous opening and closing led to labor shortages and port congestion.
Between port openings and closings and the labor shortage, the resultant effect of this crisis is the hike in the price of shipping containers. Since this has happened, eCommerce merchants must employ various means to deal with the rising container shortage price. This can be achieved through being fully communicative with customers, adjusting shipping delays into delivery lead time, offering full-cost visibility in checkout.
Fortunately, Easyship can help eCommerce merchants curb issues caused by rising freight costs. Here’s how Easyship helps merchants like yourself reach new global markets:
- Shipping Rates Calculator: Get instant access to the best available shipping rates. Users save up to 70% off discounted shipping rates for 250+ couriers.
- Global Fulfillment Network: Scale your business globally with our warehouse partners spanning four continents. Now, you can be closer to your customers to avoid longer shipping delays
- All-In-One Dashboard: Manage all your shipments or create a new shipment from one place. Plus, import orders, upload CSVs, or sync directly from your eCommerce store
Ready to ship? Sign up for a FREE Easyship account and gain instant access to our global fulfillment network
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