3 Main Reasons for the Sudden Surge in Sea Freight Rates

In recent years, we have witnessed a remarkable phenomenon that is freight transport, the sea rose higher mutation. This has caused many difficulties for the import export business and affect the prices of goods on the market. So that's why freight ship increased twice as high as what? Freight train increased influence how to business? Should choose a transport unit which is reputable? Let's find out!

Freight ship rose – Cause difficulties for business

Reasons freight ship increased twice as high as what?

There are several reasons why the freight ship to increase twice as high is because:

Elements of bridge

Growth in global trade and consumer demand: The economic recovery after the pandemic has boosted demand for consumer goods increases. This leads to the demand for shipping goods by sea spike, beyond the power supply of the carrier.
Teen containers: Due to demand, shipping, spike, along with the containers stuck at ports and are not returned promptly, has led to a shortage of empty containers around the globe. This reduces the ability to transport cargo and push rates higher.
Shifting the supply chain: The epidemic of COVID-19 has forced businesses to adjust their supply chains, looking for the source of supply new and transportation routes instead. The sudden change has caused much uncertainty and increase the cost of shipping.

Elements provides

Elements of supply and demand affect the freight ship sea rise or fall

Jams port: The sudden surge of energy goods imports at major ports in the world has lead to overload, causing jams serious. The ship must wait to be stevedoring did increase shipping time and costs.
Labor shortage: The epidemic of COVID-19 has caused a shortage of labor at the ports, especially the developed countries. This reduces work productivity of the port and slows down the process of customs clearance of goods.
Fuel prices: rising oil Prices have increased the cost of operating the ship, one of the factors that the biggest cost of the shipping industry. The carriers are forced to transfer part of the cost of fuel increased to customers through the increase in freight rates.

Other factors

Pandemic COVID-19: in Addition to the effects mentioned above, the pandemic also caused many other difficulties for the shipping industry as measures, travel restrictions, closed borders, and the political instability in a number of areas.
War trade: The trade war has led to the imposition of tariffs on imported goods, increase costs and reduce consumer demand. This indirectly affects the shipping industry.
Climate change: The phenomenon of extreme weather such as storms, floods have caused more disruption for operation, shipping damage to ships and port infrastructure to the sea.

The relationship between the elements

The above factors do not operate independently but have mutual relationship and impact each other. For example, the shortage of container not only due to the increased demand, but also due to the delay in the return of the container at the port of congestion. Similarly, the increase in fuel prices not only increases the cost of operating ships, but also reduces transportation needs, contribute to worsen the congestion at the port.

Freight ship increased influence how to business?

Impact on business

Increase the cost of production

The cost of raw material input increase: When the cost of transportation of raw materials, increased production rates also increased.
Reduced profitability: the profitability of the business is shrinking due to increased production costs, while product prices can't increase proportionately.
Competitive pressure: the Business faced with pressure greater competition from rivals that cost of production is lower.

Reduced ability to compete

Difficulty in directory: high transport Costs reduce the competitiveness of exported goods, make business difficult in penetrating new markets.
Losing market share: Business can lose market share to the competitors have the shipping cost lower.

Impact on consumers

Commodity price increase

Price of living increasing: consumers have to pay more money for essential items such as food, fuel, and consumer products in other.
Reduced purchasing power: With the income does not change, the consumer will have to reduce spending for other items to meet essential needs.

Reduction choice

Deficiency of goods: Due to the shipping cost rise, many businesses will limit the import of items not essential, leading to a shortage of goods on the market.
Product quality, reduce: To reduce costs, some businesses can choose the supplies that are of lesser quality, affect the quality of the final product.

Impact on economy

Affect economic growth

Reduced investment: the shipping Cost increase will reduce the attractiveness of investment projects, especially projects related to export.
Decreased production of: Business up production to cope with a difficult situation, which leads to a decrease in gross domestic product (GDP).

Rising inflation

General prices increase: The increase in the price of the imported items will push the general prices in the economy up high, causing inflation.
Reduction in the purchasing power of money: Inflation reduces the purchasing power of the currency, negatively affect the lives of people.

The implications else

Change consumer behavior: consumers are subject to change consumer behavior, his priority the domestic product or the product have lower cost.
Change the structure of production: The business can adjust the production structure of his move to the production of the products value higher to reduce the impact of shipping costs.
Enhanced protection: The national can apply the protective measures, trade in order to protect the business in the country ahead of the competition from other countries.

Should choose a transport unit which is reputable?

HNT is a reliable unit which you can choose

If you are looking for units of reputable shipping, has many years of experience with shipping rates, stable HNT is one of those names that you can't ignore. We have partnered with many businesses, large and small in the country when shipping, and the procedure for transit, durian Thailand from the gate Thaket - Lao through the gate Friendship or Ha or dongxing, China, as well as shipping other fruits go to other countries.

In addition, HNT Logistics also receiving multiple shipping products diverse.

Contact HNT via hotline 0981.655.880 (Mrs. Thi) for more detailed information about our service, okay!

See more: Essential Knowledge About the BDI Index