As the COVID19 pandemic swings into the third year, companies are facing soaring rates on ocean freight. Small businesses are in a state of sticker shock. Cargo transport costs remain elevated; many long-term contracts shippers have now signed with container lines.
What is Pushing the High Prices?
Supply and demand are governing container rates. With only so many ships and containers available, transporters are facing a stronger-than-normal demand for finished products, raw materials, and goods. Congested ports are also further stretching things thin.
Officials Study What is Driving the High Shipping Costs
Recently, the industry had ten key players who have started to garner a great amount of regulatory scrutiny and U.S. lawmakers are also starting to scrutinize pricing.
Officials around the globe are paying particular attention to the alliances formed between the biggest companies which are based on commercial agreements. The agreements let competitors share the space on the ships and overlap trade routes. The goal is to maximize efficiencies and lower costs. However, some customers feel that the pacts have a negative impact on competition and are keeping the rates high.
The extended strain continues to accelerate inflation. Big companies appear to be able to afford the higher prices, but the smaller ones are struggling to make a profit.
Small to Midsize Businesses Suffer Under the Heavy Inflation Costs
Unprecedented challenges continue to plague the supply chain causing disruptions and driving prices continuously higher with no end in sight. Small to midsize players will continue to struggle. Many predict that the prices will not come down to pre-pandemic lives for at least two to five years, if ever.
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