International shipping broker

What Causes Freight Rates to Increase? Everything you need to know

When it comes to determining the costs of your freight shipments, there are many different factors involved. For businesses working with an international shipping broker, who depend on shipments coming from other countries, it is important to do whatever you can to successfully manage those costs and their impact on your bottom line.

With that in mind, let’s talk about some of the factors that could be impacting freight costs, especially during the holiday season and the era of the COVID-19 pandemic.

Limited Capacity for Freight

As the pandemic continues to impact the world economy, one of the biggest challenges for freight has been the decreased number of passenger planes flying. Freight also travelled on these passenger flights, so as they have been grounded, the result has been a decreased amount of air cargo space.

Demand for the limited space has driven prices up, as businesses go through a restocking phase after a slow retail summer. With the holidays driving consumer demand, shipping costs related to air cargo are likely to increase in the short-term. As the vaccine is distributed throughout the world, those costs may start to come down as passenger flights resume and the amount of air cargo space available increases.

Still, it is important to recognize that the shipping industry will likely continue to face high demand until the vaccination process has been rolled out internationally.

This limited air cargo capacity is impacting shipping freight as well. With limited ability to use air cargo, more businesses are looking to use international shipping brokers who can help them get their cargo onto ships and freighters. As demand increases, the rates are going to continue to rise. However, as vaccines ship and more vessels can return to sea with full crews, the likelihood that this too will start to drive down prices.

Freight Costs Are Impacted By Tariffs

Depending on where you are shipping your goods from and what country your goods will be arriving in, you are likely going to be dealing with various tariffs. Therefore, you may find that shipments prior to a tariff increase may end up costing more, as everyone races to get their goods into the country prior to the increase.

In 2019, for instance, tariff increases, and the holiday season impacted the costs of ocean freight. Businesses were looking to bring goods in before the high consumer demand and changing tariff costs meant that shipping prices increased.

If you are looking to bring in goods ahead of a holiday or period where there is high consumer demand, then it is going to impact your freight prices.

Having the Right Documentation

Another aspect that can increase your freight costs is having the right documents in place before your shipment is loaded and begins its journey. Working with an international shipping broker, you can avoid potential fines or delays that end up costing your more in terms of freight costs.

Therefore, it is important to know the rules and regulations of both the country you are shipping from and the country that you will be importing your goods into. By making sure that all your documents are in order, you can move quickly through customs and get your goods moving to fill your customers’ orders.

When it comes to managing your freight costs, there are several points to keep in mind. One, shipping capacity can cause costs to rise. Two, tariffs can rise and fall, thus potentially impacting the costs of your freight. Three, there are the costs associated with not having the right documentation in place. Fourth, it is important to note that where your shipments are coming from and the length of time that they must travel can also impact costs.

There are multiple details that need to be managed in order to keep your freight shipping costs manageable. Working with an international shipping broker, like our team, can be a beneficial way to effectively manage your freight costs. Contact our team today to learn more about how we can assist your business to manage your international shipments effectively.

Atlanta Customs Brokers is one of the oldest and most trusted customs brokerage and shipping firms in Atlanta. Established in 1985, our company has been a fixture in and around the Atlanta airport and Savannah port for more than 31 years. We enjoy working with our international partners and enjoy what we do. If you are a first-time importer or exporter or a large corporation, we can handle your needs.