9 Tips to Navigate The Rough Seas of Freight Shipping
Editor’s Note: This is a guest post written by Corinne Berzon, Content Specialist at Freightos.
Every year, around 11 billion tons of goods amounting to trillions of dollars are shipped by sea accounting for an estimated 90% of consumer goods. From your hair clips to your shoes, most of what you own is likely manufactured in another part of the world and then shipped off in a boat, put in a truck and will eventually find its way to your door.
This process involves lots of documents, regulations, and procedures, but in regular conditions, ocean freight is cheap and fairly reliable. However, over the past year international shipping has become volatile and wildly expensive.
An estimated 97% of U.S. importers are small and medium-sized businesses (SMBs), and as shipping becomes harder to secure and more expensive, these businesses are facing mounting costs and delays that can seriously impact the bottom line.
In this post we’ll be showing you some ways in which you can navigate today’s rough seas of freight shipping to ensure your goods arrive safely at their destination while reducing friction and uncertainty.
It’s about the climb…
When the coronavirus pandemic hit in early 2020, manufacturers around the world shut down and trade ground to a halt. To hedge against massive losses, global freight carriers cut back operations. But by the summer’s peak shipping season, Chinese factories had reopened and consumers around the world shifted from buying services to buying stuff. Lots and lots of stuff.
The suddenly high demand met with COVID-constrained capacity and BOOM, freight prices started to climb and climb.
Due to ongoing pandemic-related instability and additional turmoil (for example the accidental blockage of the Suez Canal by a carrier ship), shipping capacity is extremely tight and there is currently a dramatic dearth of equipment – including containers.
This has made it very difficult to keep goods moving, never mind keeping them moving on time and on budget.
Currently, retailers are struggling to keep inventory levels up ahead of peak season, an estimated 5.5% of all ocean capacity is currently waiting outside a port, and storage space for finished goods waiting to be shipped is scarce.
As a marketplace platform for global freight, we were keen to learn more about what importers and exporters are experiencing and what they are doing to navigate the choppy waters.
So, in a series of surveys and interviews, hundreds of SMB importers and exporters from around the world gave us a peek behind the curtain. Here’s what they said:
- 77% of SMBs reported that their businesses have experienced supply chain difficulties
- 53% of those experiencing supply chain problems report increasing their prices as a result
- 73% Amazon sellers who’ve raised prices have done so by up to 20%
- 55% stated that transit time delays were their biggest pain point
These are some significant challenges, but goods are still moving.
Despite delays, carriers, logistics providers, and supply chain managers are showing resilience in the face of crazy conditions. These conditions have also given industry stakeholders the opportunity to step up their game.
Beyond the peak – what’s next?
Moving forward, we’re confident that digital solutions harnessing transparency today will avoid similar crises tomorrow. With this in mind, here are some tips into how you can still keep your goods moving despite the high-friction environment.
- Compare 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 U.S.
- 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
- Understand that delays and extra charges 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 greater confidence in the transit times.
- Book now if you can. Freightos.com is a marketplace for freight comparison, booking, and management, empowering SMB importers to access online freight quotes in seconds.
- Make sure that you have manpower to accept your goods at arrival. This will minimize delays.
- 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.
Want to learn more about the current freight market? Watch Freightos.com CMO Ethan Buchman and Research Lead Judah Levine in this video highlighting major moments and trends in the freight market.
Corinne Berzon is Content Specialist at Freightos.com, the world’s largest digital freight marketplace. When she’s not competing in office-wide freight pun competitions, Corinne strategizes and executes partnership and content marketing initiatives that bring smoother shipping to importers and exporters around the globe.