Last updated: October 10, 2021
Freight & Shipping Delays
With ongoing pandemic-related delays and closures, non-stop demand for ocean freight from Asia to the US, and a lack of capacity, ocean rates are still very elevated and transit times volatile.
Port Congestion: Insider View
In light of everything that’s going on in freight today, Freight Right Global Logistics founder and COO, Robert Khachatryan, headed over to the Long Beach port to get a close-up perspective of the container crunch.
Check out the full video below:
Ocean freight rate increases and delays
Production in China slowed down this week during the Golden Week holiday. With power outages shuttering factories and with ocean delays, it’s unlikely that shipments not already moving will make it in time for the holidays.
Transpacific ocean rates stayed level this week after a significant drop a week ago. But rising oil prices could mean that carriers will increase fuel surcharges at the end of the month.
Plus, worsening port congestion and delays at LA/Long Beach are keeping Asia-US prices extremely high at more than quadruple their level a year ago. The congestion may also be responsible for pushing North America-Asia export rates up more than 10% this week to over $1,000/FEU.
The epic delays at LA/Long Beach have sent many importers looking for other options.
The non-stop disruptions are impacting many enterprise importers along with smaller shippers. Major retailers like Home Depot and Costco have recently chartered their own container ships to secure some ocean space, and this week Coca-Cola announced that it recently moved a 60K ton shipment in sacks aboard a bulk carrier instead of in containers.
|Containerized Freight Rates from the Freightos Baltic Index|
|FBX Lane||Global||Asia – US West Coast||Asia – US East Coast||Asia – North Europe||North Europe – US East Coast|
|* Compared to the corresponding week in 2020|
Basically, freight is really expensive and capacity is incredibly tight. Many importers and exporters are willing to pay premiums in addition to these rates just to keep their goods moving, but with continued disruptions this is often not enough.
Plus, with ships stuck waiting at US destinations like LA/Long Beach, importers and exporters are still struggling with the ongoing container crisis.
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Air freight delays and cost increases
Expensive and unreliable ocean freight is pushing shippers to air cargo, but this demand is impacting pricing and increasing the landed cost of goods.
China’s zero tolerance approach to COVID outbreaks is also disrupting the air cargo market. Travel restrictions and quarantine requirements for ground and air crews have resulted in hundreds of cancelled flights or planes leaving half loaded or empty.
New rail disruptions in the US also have many importers considering air cargo as an alternative. Though operations are improving at Shanghai’s Pudong airport, COVID-related disruptions are having a big impact on air cargo capacity and rates.
Air cargo from China to the US is now four times higher than pre-pandemic levels. Ground handling at many US air cargo hubs are overwhelmed as well, with shipments arriving at Chicago’s O’Hare airport still stuck for days.
Trucking delays and cost increases
With high demand from consumers, importers are rushing to replenish inventory, causing capacity in trucking to tighten and driving rates up.
Now many observers warn that quarantine rules for returning truckers could cause significant delays even if goods manufactured over the holiday are ready to ship.
Overwhelmed trucking, warehouse and rail logistics are also contributing to the port delays, and to the overall slog in end to end logistics. Freightos.com marketplace data shows that last month, China-US ocean shipments took an average of 73 days to arrive at their final destination, 83% longer than in September 2019.
Amazon shipping in 2021
With a 60% annual increase in sales by third party sellers on Amazon’s marketplace last year, the boom in e-commerce continues.
Keeping up with door to door pricing for Amazon FBA shipping can be a hassle.
Want to know what the rates are? Check out Freightos.com’s FBAX, the Amazon FBA freight index
With data from thousands of weekly pricing points from freight forwarders, we’ve developed a weekly index of freight prices including for Less than Container Load (LCL), Full Container Load (FCL), and air cargo, from major export cities in southeast Asia to the most popular Amazon fulfillment centers in the US.
Read up on how Amazon sellers can deal with rapidly-changing consumer demands as well as inventory challenges HERE.
When will freight rates and shipping prices go down?
In the current situation, many importers and exporters are wondering when they can expect freight rates and shipping prices to go down. The answer? Not yet.
But, despite potential delays and high freight shipping costs, there are a few steps importers can take right now:
How to navigate the current freight market:
- Compare at least a few quotes and modes to make sure you are getting the best cost and most efficient service possible.
- Buffer your freight budget and transit time for changes. Costs due to unforeseen delays or limited capacity can arise, so be prepared.
- Explore warehousing options to mitigate the effects of lowered demand and business restrictions in the US.
- Pay attention to the profitability of your goods and consider if a pivot could be worthwhile. Additionally, remember to factor in freight costs when assessing profitability.
How small or midsize importers can plan for operational success on Freightos.com:
- Understand that delays and extra charges may arise. Freight forwarders are trying their best to move goods on schedule without additional fees, but in this unstable period, delays and additional charges can occur out of forwarders’ control.
- Consider which shipping mode is best for you right now. As during non-pandemic times, ocean freight is typically far cheaper but has significant lead time. If your transit time demands it, ship by air and you’ll have confidence in the transit times.
- Book now if you can. Freightos.com is fully operational, so book orders now to get goods moving as quickly as possible.
- Communicate regularly with your freight forwarder. This is more important than ever – staying in touch means you’ll have a better handle on your transit time and stay on top of any changes that may arise.
- Make sure that you have manpower to accept your goods at arrival. This will minimize delays.
How to stay informed:
- Keep up to date on the industry with our resource roundup page.
- Check out our daily FBX ocean rates indexto help you stay on top of freight rates in 2021.
As always, we at Freightos.com are here to help. Please reach out if you have any questions or concerns.