Ocean Freight Industry plays a vital role in stabling the economy. This industry has a significant contribution to make international trade smooth. Millions of companies, importers, exporters, traders, and entrepreneurs are involved in making this ocean freight industry more demanding. Different people benefited from container shipping from every corner of the world.
As we all know, there is a massive demand for container shipping therefore, any minor changes can bring affect the efficiency of container shipping. There are so many factors involved in increasing and decreasing shipping rates. Sometimes shippers cannot control the shipping rates because things are not under their control. This blog post will discuss the top 5 factors increasing shipping rates.
Top 5 Factors Increasing Shipping Rates:
An increase in shipping costs is beyond the control of the shippers. Shipping volume, specific routes, and port, and carrier charges are some of the general reasons directly connected with the shipping rate. However, the top 5 reasons for the rise in container shipping rates are as follows:
- General rates increase (GRI)
- High demand for shipping during season
- Increased freight rates
- Trucking shortage
- Emergency bunker surcharge (EBS)
General Rates Increase (GRI):
Shipping lines changed ocean freight rates, which could be a important reason for container shipping costs. The increase in GRI also depends upon the market movement, which could be high or low. If the year is stable, there are no chances of an increase in shipping rates again and again. Shipping lines can add GRI to any ocean freight. However, in the past few years, imports get affected more than exports. It is also noticed that importers and exporters pay double than the original price because the booking has not been confirmed in the day before GRI gets affected.
High Demand For Shipping During Season:
When shipping season is at its peak, there are obvious chances of an increase in container shipping rates. In the high season of shipping, there comes a dramatic increase in freight charges. The reason behind this increase could be different, i.e., the vessel capacities, freight prices, the increase in the global supply chain, and much more. The peak season is usually high from July until November or December. Another reason for the sudden increase in shipping rates is the extra workload that shipped bears during the peak season.
Increased Freight Rates:
Demurrage, detention, and fees from custom inspections are the factors that cause a massive increase in shipping costs. Shippers cannot control this increase; however, they can take some extraordinary measures to avoid this situation, i.e.
- Completion of all documentation with no error
- On-time submission of documents
- Elimination of all factors that could raise alarms to the customs officers for your shipments
One precautionary measure to avoid these situations is properly planning your shipment before the last moment. This way, you could remain safe from paying extra fees for ocean freight. Also, there will be enough time to be flexible with your shipping dates.
The shortage of trucks is one of the solid reasons for increasing container shipping rates. Shippers mostly face a shortage of trucks, which is not in their control to tackle the situation. As there comes a truck shortage, the freight rates increase. Prices get automatically high because the demand increases and the capacity to deal with shipments decreases. It is essential to have some backup plan to avoid the shortage of trucks so the supply chain remains smooth.
Emergency Bunker Surcharge (EBS):
Emergency Bunker Surcharge is another reason for the increase in the shipping rates. EBS is a surcharge that shipping lines can implement in time of need. This becomes the cause of the rise in fuel costs. EBS can be implemented as an emergency charge that often leads to an increase in shipping costs. However, most shippers claim this increase in ocean freight is an unfair practice.