2021 Freight Rates and How to Navigate the Current Freight Market
Staff Content Writer
May 31, 2021 • 5 minutes read
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With the ongoing pandemic and the uncertainty that it brought to the world, industries across the world are all still scrambling to find their balance and adjust to the new status quo.
The Current Situation of Freight RatesFreight rates increased by 80% by the end of 2020, which carried over to 2021. The high cargo volume is maintaining high freight rates, which was exacerbated by the influx of COVID-19 online shopping shipments. Freight conditions had just begun improving and catching up from Asia to Europe and the Mediterranean when the giant Ever Given container ship blocked the Suez Canal for almost a week. The blockage that occurred near the end of March obstructed traffic and triggered container spot freight rates to increase, again. According to Jan Hoffmann, the head of UNCTAD’s trade and logistics branch, “About 80% of the goods we consume are carried by ships,” and the world relies on shipping. From clothes, and medicine, to processed food products, almost all manufactured goods are shipped in containers. And COVID-19 fundamentally changed the way consumers spend money. Instead of spending money on experiences like entertainment, travel, and services, people buy tangible objects. Since countries have been implementing quarantines to ensure public health safety, people have been shopping in online stores, which increases demand for products and freight forwarding services from Asia to the US.
Will Freight Rates Go Down?International freight volumes are not likely to decrease in the near future, which means that freight rates will not be going down either. Freight rates have stayed high since the second half of the pandemic, and rates have only been climbing since the summer of 2020. Importers are constantly trying to stock up their inventory to keep up with high demand from consumers. With ocean, air, and rail freight consistently being in high demand, storage container capacity will decrease, and freight rates will increase. International freight will also be preoccupied with shipping medical supplies and COVID-19 vaccines, which will lead to the continuation of unsteady and unpredictable freight rates in 2021. There are also warehousing and distribution issues. Social distancing requirements are extending the time needed for logistics activities and the supply chain process. The decrease in employees in the workplace and other labour shortages in the delivery process are making the already long process even more time-consuming. Even if more tractors and trucks are brought to the road to catch up with high demand, quarantine rules for returning drivers may still cause significant delays.
How Importers Can Navigate the Current Freight Market
Have Patience, But Do NOT Stall
Use Real-Time Information
Real-Time Information Can Be Your ShieldHigh freight rates are not within the control of any specific company, but there are other factors in the shipping process that businesses themselves can control. With adequate preparation, the willingness to be flexible, and real-time information, freight forwarders can cruise their way through the current freight market. Having access to real-time information allows businesses to know the exact location of their cargo, which allows them to prepare for the pick-up process accordingly. Companies with this information do not need to worry about paying additional demurrage or detention fees on top of the already high freight rates. GoFreight has an EDI-integrated, real-time tracking system that supports ocean, air, and rail freight. It synchronizes the ETA/ETD of cargo through GPS and AIS systems to provide real-time tracking data. The system also shows users incoming deadlines and tasks through automatic updates. Contact us to learn more about how modern freight forwarders utilize real-time data to navigate through the uncertainty and ever-changing freight rates of 2021. Our customer service team will be willing to answer any questions you may have.
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