The increasing costs of international shipping in 2021
The new year has already brought about a wave of problems for the global supply chain3 minute read
The cost of international shipping is soaring. The ongoing pandemic has triggered supply and demand issues which have caused shipping costs to quadruple in the last nine weeks, going from $2,000 for a 40-foot container to over $9,000. By developing a firm understanding of the situation, UK businesses can help to protect their finances from the adverse conditions of 2021.
What’s causing the current shipping delays?
Lockdown restrictions have limited the public’s access to brick-and-mortar shops, creating an online ordering boom. This might have been manageable under ordinary circumstances if the demand were not compounded by two additional factors…
Shipping from UK to Europe after Brexit has been far from smooth. Red tape around regulatory checks and customs declarations has caused bottlenecks at Felixstowe and other major UK ports. More than half of UK businesses that regularly trade with the EU have been affected. The Brexit effect on shipping has led to higher tariffs being imposed on the UK in an attempt to drive demand down.
Shortage of empty shipping containers in China
China is currently experiencing an extreme shortage of shipping containers, due in part to Brexit bottlenecks and the increased global demand caused by COVID-19. Containers that aren’t queued and waiting to come into UK ports are sitting empty, waiting to be taken back overseas.
The high cost of delays
Shipping delays haven’t just inflated the price of containers — UK importers are also facing expensive congestion surcharges which have been introduced at Felixstowe, Southampton, and London Gateway Port on containers arriving from North East Asia. On top of this, the cost of packing and shipping materials like wooden pallets and corrugated cardboard have also risen to meet soaring demand.
Unless they can find a way to manage international supply chain costs, UK businesses will be faced with the decision to make a loss or pass inflated costs onto the consumer.
Limit the impact of international shipping costs
Although many of the factors concerning international shipping are beyond control, there are ways to limit the impact. Working with a foreign exchange expert gives you access to a variety of tools and services which can help protect your revenue, provide more accurate forecasting, and manage the risks of a fluctuating market.
Stabilise your supply chain currency costs using specialist foreign exchange services like a forward contract. A service like this will secure a favourable exchange rate for up to two years, so your overseas invoices don’t fluctuate in price.
When competition for resource is this high, speed is key to success. Rate tracking tools and market updates allow you to move fast when the time is right, making those high costs more manageable.
Speak to one of our specialists today to find out how we can help limit the impact of overseas costs, or even sign up for a moneycorp business account online.