Last updated: August 3, 2022
Freight & shipping costs & delays
There are a number of current shipping issues impacting freight costs and shipping delays. Seasonality, a drop in available exports, and inflation’s impact on consumer demand are causing decreased ocean pricing – though these remain extremely elevated compared to pre pandemic prices.
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Ocean freight market update & forecast for 2022
Freight rates dropped 6% to $6,159/FEU in July driven by rate decreases on ex-Asia to US West Coast and European lanes.
With these decreases, and considering last July’s sharp increase, this rate is 39% lower than its level a year ago, though still more than 4X the pre-pandemic norm.
Asia – US West Coast prices fell 13% since the end of June to $6,593/FEU, a level last seen in early May 2021.
This rate is 55% lower than at the start of the year and 64% lower than its level last July as rates were soaring toward a record high.
Compared to May and June in dollar terms, the rate decrease slowed in July, though rates are still more than 4X pre-pandemic norms.
- Asia – US West Coast fell more than 50% in Q2 and continue to decrease.
- Asia – N. Europe prices have been stable since early May. This is possibly due to worsening congestion at European hubs – but are 30% lower than at the start of the year.
- Europe – US East Coast rates are 50% lower than a year ago, and about 4X pre-pandemic norms. Of the major trade lanes, only transatlantic prices are higher than at the start of the year.
Finally, though labor negotiations on the US West Coast are reportedly making progress, new labor issues that could affect logistics are developing in Europe and among Canadian and US rail workers. These could cause a strain on supply chains and potentially push rates up once again.
These are container freight rates for August 1, 2022 according to 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 2021|
Freight cost increases 2022 chart
The past couple of years have been volatile for shippers around the world. At the beginning of the pandemic, attempts to hedge against dramatic rate drops via capacity management contributed to an increase in prices when consumer demand shot up in the summer of 2020.
Now two years into the supply chain crisis, rates are beginning to stabilize – although on some lanes prices are still 400% higher than they were pre-pandemic.
For a bird’s eye view of freight costs increases in 2022 and since the beginning of serious supply chain disruptions, check out the chart below based on FBX data.
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Air freight market update, delays, cost increases, and forecast for 2022
Ripples from the war in Ukraine and ongoing coronavirus outbreaks are disrupting air cargo – especially Asia-Europe operations – and putting pressure on air cargo rates.
Ex-Asia air cargo typically experiences a lull in the summer months before the air peak season in the fall.
Freightos.com marketplace rates show China – US West Coast prices have fallen 15% in the last month, though rates are still about twice the pre-pandemic norm.
With the return of transatlantic passenger travel the Freightos Air Index shows Europe – US East Coast prices are 28% lower than a year ago, but with added fuel costs and labor shortages are still about 50% higher than normal.
Trucking delays and cost increases
Climbing oil prices translate directly to higher diesel prices. U.S. diesel prices are up significantly from last year and are likely to go higher as sanctions are mounted against Russia, the third-largest oil producer in the world. These costs could be passed down to shippers, making international shipping even more expensive.
The conflict is impacting ground transport in Europe, with trucking logjams reported throughout the region.
In the US, warehouse space remains scarce and renewed rail backlogs are becoming a growing problem.
Plus, looming labor disputes may further disrupt ground transport.
All of this can cause fluctuations in transit time for imported and exported goods, as seen in this chart from Freightos.com.
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Amazon shipping costs in 2022
With a 60% annual increase in sales by third party sellers on Amazon’s marketplace in 2021, the boom in e-commerce continues in 2022.
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 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 weekly freight market update.
- Check out our daily FBX ocean rates index to help you stay on top of freight rates in 2022.
As always, we at Freightos.com are here to help. Please reach out if you have any questions or concerns..