Global shipping costs have skyrocketed over the last couple of years due to the covid-19 pandemic. In the beginning, the demand for products rose dramatically due to public hysteria and mass hoarding. CNN claims that if the rates continue their current track by 2023 inflation amounts will cause a huge economic crisis.
The production lines were hard-pressed to keep up before the lockdowns, but since they had to deal with making more freight with fewer people, it became an impossible task. As things leveled out a little and more products were available the ports started becoming overloaded with containers, and ships.
Each port can optimally handle a set amount of storage units. Currently, there is not enough room for all the containers that are needed. Ports are even being overloaded with boats to the point of having them wait in the water around the ports until a dock opens. This slows down delivery, causing a loss in profits, which pushes up costs to cover the loss of time. It becomes a vicious circle that ends in consumers paying more money for shipping.
Fierce competition between shipping companies has ensued. Bids for access to the ports and storage areas have risen to amounts beyond reason. This also has caused an increase in shipping amounts. Companies must cover their costs to stay in business. Having to make, and pay, such high amounts will always roll down to the consumers. The International Commerce terms and rules state that the buyer will pay for the increase in prices. An INCO glossary will give you a complete breakdown of the terms and policies used, as well as an explanation of what they mean.
The unbalanced bounce back of the production lines, and the sporadic closing of ports and shipping lanes, have caused shippers to drop behind their normal schedules. It makes it impossible for time frames to get back to normal until the supply and demand can keep up with each other.
One of the main issues causing the hike in cost is the fact that ocean freight companies have a monopoly on shipping. There is no other feasible way to get items from country to country. Of course, once the products have made it to the ports, regular shipping lanes can handle getting them to the exact locations needed. Until it gets to the ports, though, ocean liners have complete control. With not much competition they can raise shipping costs. If you want the products, you will have no choice but to pay the inflated amounts.
All these issues lead to one thing. Shipping costs going up, and staying up, for the long haul. Costs will continue to rise, which will increase the price of the products, and will hit the consumer in the pocketbook. There is no end in sight to the inflated prices. Even when the covid-19 virus gets under control the prices will stay where they are. Very seldom does the cost of service go down in price once it has been increased.
