Container shipping rates can be affected by several factors, such as container size and type, seasonal volumes, and the shipping mode (ocean, over land, or rail). However, there are a few issues you have little control over, like the weather, politics, rising fuel costs, and market volatility, any of which could be causing your container shipping rates to skyrocket.
So in the interest of preserving your margins and keeping customers happy, we’ve got some insight that might help you make sense of it all. Here are the top five factors currently impacting container shipping rates.
1. The General Rate Increase, or GRI
The General Rate Increase (GRI) is a rate hike globally applied by container carriers, and it typically occurs at the start of each year or the beginning of each quarter. The GRI affects container shipping rates across container types and routes, meaning container shippers must factor in this additional cost when budgeting for container shipments.
2. Peak Shipping Seasons
In addition to the GRI, container carriers may apply seasonal rate adjustments or peak season surcharges (PSS) during periods of high demand, such as during the summer or holiday gift-giving season. In some cases, peak season will increase container shipping rates by up to 30% or more, depending on container size and route. Extending your lead times during peak season, planning well in advance, and working with a reputable logistics provider are all excellent ways to reduce risk in this area.
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3. Vehicle and Driver Shortages
Post-pandemic driver and vehicle shortages continue to plague the logistics environment. While staffing was initially the most significant issue, chip shortages, vehicle inventory shortfalls, and massive delays in repair timelines have reduced availability across the board, resulting in greater demand and higher prices.
4. Emergency Bunker Surcharge (EBS)
Carriers can tack on seemingly random fees when they feel it’s necessary to do so. Usually, an EBS is meant to cover sudden rises in fuel costs or other market fluctuations affecting their bottom line. The trouble is, EBS can be implemented unexpectedly, meaning that all the meticulous planning and attention to detail you apply to it won’t prevent it from happening.
5. Additional Costs on Ocean Freight
Any unexpected delays can result in extra costs for demurrage, detention, and customs fees—any of which can drive container shipping costs through the roof quickly. And while many such delays are beyond your control, shippers can reduce the potential by paying strict attention to documentation. When shipments are properly classified, packaged, and documented, the risk is minimized.
By understanding the various factors that affect container shipping rates, container shippers can better anticipate cost fluctuations and make informed decisions about container shipping services. Partnering with an experienced 3PL may help container shippers take advantage of discounts that carriers offer during periods when demand is low, helping offset container shipping rate increases.
DTS World Cargo is a trusted logistics provider specializing in global container load and LTC shipments. Speak to us today about your container shipping needs.