Why the Cost of Shipping is Continuing to Rise – and What You Can do About it.

Why the Cost of Shipping is Continuing to Rise – and What You Can do About it.

EES

If you’ve been involved in importing any item in recent months, it’ll come as no surprise to you hear that the cost of shipping is rising – and unfortunately, we at EES Shipping expect this to continue for at least the short term.

While freight rates have softened from the highs seen at the peak of the pandemic, costs are increasing in other areas of the supply-chain.

We’ve seen landside costs increase at least 10-15% in the past six months, particularly transport and detention.

The rising cost of fuel has resulted in transport companies introducing a surcharge, or increasing existing levies, while the tight labour market means their wage costs are on the rise too.

As we’ve recently highlighted, detention costs have been an ongoing issue, with shipping lines only allowing 7-10 days for containers to be returned. It’s just an unrealistic timeframe when you consider the continued congestion across the supply-chain.

Detention costs have become such a problem that the Freight and Trade Alliance is demanding reform, to ensure reasonable container detention policies are administered for the de-hire of empty containers.

It’s a push we wholeheartedly support.

Added to this, we’re also seeing businesses having to pay more in detention and storage costs while waiting for containers to be inspected by Biosecurity officers.

Wait times for inspections have increased in recent months, which ultimately ends up costing more. Despite extra funding being committed to biosecurity in the most recent Federal budget, the backlog has actually worsened.

A client of ours recently had cargo in a container on the east coast that waited more than four weeks to undergo necessary quarantine checks. The delay added thousands of dollars to the total cost.

The new Federal Labor Government should take action to bring down wait times as a matter of priority.

I know that many of the price hikes are outside customers control, however there are steps people can take to potentially avoid being hit in the hip pocket;

  • Plan Ahead: With Christmas now just 25 weeks away, businesses need to start thinking about placing their orders sooner rather than later, to avoid the stock shortages of past years. With lead times on some products sitting around 10-15 weeks, that leaves very little time for shipping, once potential delays are taken into account.
  • Ensure Documentation is in Order: Having necessary documents lodged correctly and on time is essential to avoid any unnecessary delays. Ignorance is not an excuse and won’t buy you extra time when your shipment arrives.
  • Keep Up To Date With Industry News: Knowledge is power and the more you’re aware of current issues within the industry and how it might impact you, the easier it is to get ahead of the curve.

In a fresh indication of the increased costs being felt throughout the supply chain – Container Transport Alliance Australia issued a media release just last week warning that road transport costs are skyrocketing, and that some transport operators ‘might go to the wall unless action is taken soon.’

Unfortunately, it’s unlikely that we’ll see any real easing of prices until there are improvements across a number of points along the supply chain.

Labour shortages are continuing to create delays along the Final Mile, not to mention workers still being impacted by COVID and now the Australian flu-season.

Until we start seeing an easing of inflation, a softening of the labour market and a drop in the global oil price, costs are going to remain high.

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