Shipping rates are due to be higher in 2022 than ever before. There is a combination of factors that have resulted in these increased costs.
The COVID-19 pandemic continues to cause issues globally, with delays caused by understaffing at ports, airports, and all through the supply chain. We’ve seen ports forced to shut down and flights cancelled due to outbreaks and subsequent lockdowns. The tragic situation in Ukraine has also had a knock-on effect to supply chains, with disrupted capacity and increasing fuel costs.
This reduced capacity has not been helped by continued high demand. Whilst there has been a slight reduction in demand since the majority of lockdowns finished and as a result of inflation, it still remains higher than we’ve seen in previous years.
What Are the Highest Sea Freight Shipping Rates in 2022?
According to the Freightos Baltic Index , as of 4 April 2022 the container shipping rate for the East Asia to US East Coast Pacific Route was at $17,148, making it the highest at the time. This is a huge 192% increase for the same route in the corresponding week in 2021.
The second-highest rate as of 4 April 2022 was the East Asia to US West Coast Pacific Route, at $15,817. This has seen another big increase from 2021, up 168%. The Asia to North Europe Pacific Route was $12,050 as of 4 April 2022, up 65% from 2021, and the North Europe to US East Coast Pacific Route was the lowest at $7,759 – still a whopping 172% increase from the same week in 2021.
This increase has been caused by some ports operating at a vastly reduced capacity because of COVID-19 outbreaks. Yangshan, for example, has recently been operating at just 50% capacity. Some shippers are opting to find alternative ports, but this has resulted in a growing backlog of ships.
Air Freight Cost Increases
Air freight is also seeing huge disruption, causing an increase in shipping rates. In 2022, the Freightos Air Index showed the shipping rates for the Shanghai to Northern Europe hit a high of $11.92/kg. This is a huge 43% increase from earlier in the year, and considerably higher than the pre-pandemic average of $2.35/kg shipped.
Asia to Europe routes have been significantly disrupted due to both the current war and also ongoing outbreaks of COVID-19. Capacity has been so heavily reduced in some areas that air carriers have been forced to cancel flights altogether. So, whilst there has been some reduction in demand, it has not been enough to properly maintain the supply chain, resulting in higher costs.
Road Freight Cost Increases
Russia is the third-largest oil producer in the world. Sanctions have been mounting up against the country, which is likely to result in higher fuel costs across the globe. These costs are often passed to the shippers, meaning higher road freight rates are on the horizon.
The conflict is also causing issues with trucking logjams, especially around the borders into Russia. Some truckers have had to wait days to cross, causing delays further down the supply chain.
Europe also continues to see a shortage of drivers, with an estimated 400,000 shortfall across the continent. It’s said the issue has been caused by a workforce aging out of the job and a difficulty in attracting younger drivers to the role. The UK has especially suffered from a driver shortage due to Brexit and the restrictions that have been imposed on recruiting overseas workers.
When Will Freight Rates Go Down?
Importers and exporters alike are asking when will shipping rates decrease again. Unfortunately, it doesn’t look like they will go down anytime soon, with high costs expected to continue throughout the year.
To get the best shipping price, you should always compare quotes and methods of transportation, so you can find the most cost-effective solution for your route. You should also factor in contingencies for possible delays and extra costs that are out of freight forwarders’ control. You should be prepared for the worst-case scenario and ensure an appropriate plan is in place.
PBS is an experienced international freight forwarder . We offer a complete range of international freight forwarding and logistics alternatives, so we can always find the best solution for your budget and timeframe. Contact us to discuss your freight forwarding or request a free shipping quote today.