Why is Wholesale Shipping So Expensive in 2022?
Shipping rates in 2022 have become a nightmare for businesses around the world. Those who have been daring enough to schedule their shipments recently would know the gist of this article already. The shipping rates have risen globally, and possibly many of you might ponder over what caused this enormous inflation? Our sellers and buyers at JiffyStock want to know what is the reason and what they can do about it!
The culprit is the world’s rival, the pandemic-Covid’19.
It has disrupted the supply chain overall and caused the freight charges to go up. This article will list the prime and significant reasons for accelerating shipping rates.
High costs of transportation
Sea freight used to be the cheapest, which is why more than 80% of the trade was directly or indirectly dependent upon sea freight. Still, the Covid’19 pandemic has enormously and adversely affected the supply chains throughout the world. In the early days of 2022, the economy started to shut down. The trade activities, for a particular time, came to a halt. There was no sign of international travel or shipping seen. This relatively caused demand for oil and fuel to go down, and consequently, oil suppliers restrained their output.
However, when covid’19 started settling again, the regular activities and businesses returned to normal. Demand for fuel began to rise again, due to which transportation costs skyrocketed, making the shipping costs too high.
Increased consumer demand
During the pandemic and closure of routine activities, people, in large numbers, switched to E-commerce. People tend to purchase electronics, cosmetics, dairy items, and whatnot, sitting at home and not risking their own lives and others. This caused the demand for products to stand high, and to cater to such high demands, a high flow of warehousing activities as needed. The cost of every aspect is from warehousing staff to packaging and loading. Apart from this, it’s a universal rule that whenever demand goes up with the same or limited supply, the prices tend to rise. So, in a nutshell, more demand means more shipment, and more shipment of products means more shipping costs associated with it.
Massive ship trafficking in the ports
One of the significant reasons for freight charges to reach the sky and above is exceptionally congested ports. The ships at the dock are overbearingly increasing and waiting for too long because there is limited space and time, which could cater to offloading one cargo ship at a time.
Usually, before covid’19, only one or few ships had to wait, and the dock was most of the time available for offloading, but these days, a bulk of 32 to 38 boats are hopelessly waiting, being stationary.
The solution for this intense matter has been sorted. Shipping carriers have decided to load fewer containers on the ship to minimize the offloading time and massive trafficking in the ports. This has directly affected the shipping rates to rise abnormally because fewer containers on the vessel will cost more shipping rates per container.
The global shortage of shipping containers
China is the most significant country when it comes to wholesale shipment releases. China faced a devastating backlash from shipping containers. The global shortage of shipping containers has initially resulted from the ships waiting in the U.K. and U.S.A to return to China. China recovered from Covid’19 way quicker than the U.S.A and U.K., which is why China started its operations earlier while there were strict restrictions on the other two continents.
One of the biggest and prime canals –the Suez canal- was blocked for a week due to a ship ‘EVER GIVEN’ getting stuck over there. This disrupted the supply chain and created undue pressure on the freight companies to raise their prices extraordinarily high.
Custom-made products are currently regulating the market and are a band-wagon. Because of the huge demand for customized products these days, the need for special packaging has also risen. Extra packaging demands more space, causing higher shipping rates and eventually lower profit margins.
Why is Wholesale Shipping So Expensive in 2022 – Covid?
Wholesalers are facing the most challenging task of making feasible profits regarding their business operations. The primary reason hindering their profit maximization is the high shipping rates in 2022.
They, particularly, face higher freight charges because they sometimes have to import fewer quantities of multiple products. Low minimum order quantity-MOQ- means less space in the container and high shipping rates. Moreover, when they order in bulk quantities, the freight charge per piece/container is, however, low, but the overall cost of shipping increases due to the rise in the shipment of products. Wholesalers have to play and run their business smartly.
How to Minimize Shipping Costs as a Wholesale Business
It is important for wholesale businesses on JiffyStock and other wholesale marketplaces to understand how to reduce shipping costs.
Minimized weight/packaging of the products
Most shipping companies use the dimensional method to charge for the shipment. For the freight charges to remain low, the product’s packaging has to be updated, which will ultimately be responsible for its overall space and weight—the minimum the importance of the product, the lesser the charges if the shipment.
Increased MOQ-minimum order quantity
Minimum-order-quantity is the least/minimum amount of units a supplier will accept to ship. Increased minimum order quantity can be of great assistance in deflating the freight charges.
Opt flat-ship rate
One of the significant factors that could help wholesalers save their big bucks is to go with a flat shipping rate. Smaller items with more weight might cause you a hefty amount of charges, but the flat-ship rate doesn’t cater to the dimensional weight, which is why it is much cheaper and ideal to opt for it when you have heavy-weight products.
Pay in advance
Paying in advance can lead to a good 20% discount from FedEx and UPS. This is usually a leading solution if your shipments are the same size and the orders are pre-scheduled.
Encourage Drop Shipping
Drop shipping can be an incredible way of saving not only your costs but also delivery time.
Isn’t it a hassle to have your products to your warehouse from your supplier? Paying numerous and multiple expenses attached to it?
What if you make good terms with your supplier and ask him to deliver directly to your customer? This will save substantial shipping costs and minimize delivery time, eventually earning you customer retention.
In the end…
It’s a daydream of every wholesaler to get the goods quickly at low costs. Desired balance can indeed be attained if you succeed in your cost-cutting. Smartly take advantage of the special deal and discount offers to avail the best.