Have you placed a shipping order in the last few months? If you do, you know how high the shipping has become. International shipping rates have peaked. So, many of you might be wondering why shipping has become so expensive recently or why are shipping costs so high in 2023 ?

The primary reason for this increase is the world’s nemesis: COVID-19. The pandemic has destroyed the global supply chain since 2020. And the recent rise in shipping prices is a direct reflection of that.

Reasons Why Shipping Is So Expensive:

This blog will break down the main reasons that have augmented the current rise in shipping rates in 2023. The raised rates are predicted to remain the same until 2024. So, eCommerce and small businesses need to consider diversifying their fulfillment options. This will help them control their shipping budget.

• Shipping Container Shortage:

After the world closed down after the lockdown, China opened up its economy faster than the US and Europe. Still, shipping containers were held up on these two continents. Due to this reason, China also faced a shipping container shortage.

In January 2021, there were about 180 million containers globally, but all of them were in the wrong place. According to a survey, there were significant cancellations for new container orders in last year’s first half. Due to this cancellation, Chinese companies have produced only 2-3 weeks’ worth of supply. Then when the supply entered into the market and manufacturers tried to catch up to demand.

Due to the growing demand, every available container in China has a massive surcharge attached to it. The market prices for new containers have risen to $3500 per cost equivalent unit (CEU, a measurement used for a 20-foot container) compared to $1800 per CEU at the beginning of 2020. In late 2020, these costs were around $2500.

• The Suez Canal Accident And Its Impact:

The Suez Canal event caused another significant disturbance during March of last year. When the shipping vessel, Ever Given got stuck in the Canal, it blocked the entire waterway for a week. This incident also is responsible for a shoot up in freight prices.

An estimated 12% of global trade happens through this Canal. This incident cost a whopping $2.2 billion to 3.9 billion in international trade.

Although the blockage has been resolved for almost a year, the delays caused by it have left their impact. Ships that were supposed to make deliveries were delayed. International ports were already facing berthing and dispatching cargo ships. Further delays increased pressure on them, and ultimately freight rates became high.

• Increased Consumer Demand:

More consumers than ever have chosen the eCommerce marketplace to purchase stuff since the pandemic. From bookshelves to clothing to groceries and hygiene products, there are dozens of products customers buy online.

These high-demand products have to be shipped in large quantities. The more shipped products, the more costs are associated with their shipment. If the demand shoots up and supply remains the same, prices are bound to go up. These disruptions in the supply chain force businesses to charge more for a product to offset their shipping costs.

• Booming Commodities:

A raw material that is traded nationally or internationally is called a commodity. At this time, we are facing a commodity boom. The demand for raw materials essential for economies to function has increased. Since limited quantities are being shipped to the same buyer, shipping prices have increased. Distribution channels only have limited time and space to adjust to get products to buyers.   

   Conclusion:

The pandemic has created global supply chain disruptions, and the effects of these disruptions will continue to appear before us in the coming years. Manufacturers need an efficient planning system to minimize their shipping costs and maximize their profits. You can visit Gillson Solutions for shipping-related services. I hope now your query is clear that why are shipping costs so high in 2023 .

Also, read 7 Pro Shipping Tips For First Time Shippers.