The price of shipping goods has skyrocketed to shock everyone in the commerce space. This surge in shipping costs affects commodities prices, and the customer is bearing the effect. Product-based businesses have struggled to stay afloat with this significant increase in shipping costs. But there’s light at the end of the tunnel.
Reason for the Shipping Cost Surge
The main reason shipping costs have surged in recent times is the COVID-19 pandemic. The pandemic has fractured global supply chains, which has led to the shipping costs reflecting that. According to statisticians, these shipping costs are expected to continue rising. Here are some of the other reasons that have led to a rise in the shipping costs:
- Port congestion and closures.
- Unbalanced recovery throughout 2021.
- Very few alternatives to ocean freight.
- Global imbalances throughout.
How Soaring Shipping Costs Raise Prices around the World
More than 80% of the world’s traded goods go through the sea. This just goes to show how important it is for the sustainability of mankind. When the coronavirus hit the planet, the maritime networks were affected, significantly increasing shipping costs. Supply chains were affected due to this problem.
Thus, aside from the delays in the arrival of goods, the cost of getting them also increased drastically. Shipping costs can lead to inflation all over the world. When the cost of shipping items doubles, the inflation goes up by about 0.7%. When this happens, the effect can go up to 18 months.
How Shipping Rate Surge Threatens Global Economy
The sudden rise in the price of shipping all over the globe is set to affect the world’s economy. The global economy has already suffered the effects of the COVID-19 pandemic and is trying to recover. But the surge in shipping costs isn’t making this recovery any easier.
An even more significant problem is that demand has increased for consumer goods. Supply has suffered, due to supply chain issues and covid impacting the product development cycle. more during these times. Port and shipping officials have indicated their worries about this crisis stretching past 2022.
Trade and socioeconomic recovery will suffer the effects of this surge in prices. And this is going to be a bigger problem in developing countries. This is because smaller or developing economies rely on imported goods to survive and thrive.
How Could It Affect Businesses
Businesses will have to adjust to this surge in shipping costs by increasing the price of their products. Otherwise, they’d run into huge losses if they didn’t do this. Consumers will get a significant hit with the increase in the price of goods already starting to take effect.
Import price levels are likely to go up by 11% as consumer price levels increase by 1.5% up to 2023. This will be the case in most countries if the stats by UNCTAD are anything to go by.
Businesses operating within the least developed countries will be hit the hardest and their consumers.
Ways to Survive with the Shipping Cost Surge
Luckily, there’s still light at the end of the tunnel for those shipping items from overseas. Here are some of the ways that you could keep your business afloat, even as shipping costs surge:
Negotiate with Several Carriers
If you can, talk to several carriers and work with the one with the best deal. Don’t just select one and go right away to ship your items. You might find that others are charging less than the rest. Thus, negotiation is critical.
Weigh Packages and Save Dimensions
You need to weigh all of the packages you want to ship to ensure they’re not too heavy for transit. You can also shave dimensions to ensure that you save on shipping fees.
Use Packages Given by Your Carrier
Another way to ensure you cut down on what you spend during shipping is to opt for your carrier’s packages. This is better than using your own.
Look for Discounted Supplies
If you can’t negotiate a cheaper deal for shipping, you can opt to look for suppliers with discounted rates. You can save on the supplies and use the extra funds to top up shipping costs.
Pay for Shipping Online
You can pay your shipping fees online and save some money. It may not be much, but it can help you cater to some other costs.
Choose Prepaid Shipping
When you prepay for your shipping costs rather than pay for them at that shipping instant, you stand to save funds.
Use Third-Party Insurance
Rather than comprehensive insurance, which is a bit costlier, you may opt for third-party insurance.
Be Accurate with Billing
This is the time to ensure your eyes are wide open and visualize everything. Most mistakes happen during billing, so you have to be pretty careful.
Opt for Poly Mailers
Packaging can be a simple shipping carton to protect the contents or could be a retail point of sale item that is highly visual and an essential part of the user experience for the customer.
As a quick summary, we’ve looked at how the shipping price has skyrocketed beyond what many expected. And this has been mainly due to the effects of the pandemic. But luckily, these tips will help you out when mitigating the issue of increased shipping costs.