Shipping & Freight Cost Increases, Freight Capacity, and Shipping Container Shortage [2022]

Freight & Shipping Delays

With ongoing pandemic-related delays and closures, non-stop demand for ocean freight from Asia to the US, and a lack of capacity, ocean rates are still very elevated and transit times volatile. 

Transpacific ocean rates have been more stable at the start of the year. Despite this stabilizing trend, rates remain 8-9X higher than the pre-pandemic norm. 

Furthermore, easing prices are not being driven by any significant reduction of port congestion.

Continued disrupted schedules and port congestion, combined with omicron slow downs and Lunar New Year, mean that importers have yet to see any significant improvement in shipping conditions in 2022.

Ocean freight rate increases and delays

Ocean rates on the major trade lanes remained stable this week but are still extremely elevated. 

In ocean freight, transpacific rates increased with an increase in demand post Lunar New Year. 

Asia – US East Coast rates increased 7% compared to just 3% for West Coast prices, likely because importers are sending more shipments to East Coast ports as congestion continues to plague LA/Long Beach. 

The latest National Retail Foundation projections for US ocean import demand show no sign of decreasing volumes at least through the first half of the year, meaning that freight rates will likely remain elevated through the spring. 

These are container freight rates for February according to the Freightos Baltic Index:

What’s going to happen with freight in 2022? So far things are looking pretty similar to 2021.

Air freight delays and cost increases

While ocean rates have remained more or less stable, pandemic-restricted capacity, supply chain disruptions due to the trucker protests in Canada, and LNY slow-downs have pushed air cargo rates up – especially on North American lanes. For example, the Freightos Air Index had Canada to Central US shippers paying more than $14/kg to move cargo by air, about 7X typical rates. 

COVID impacts on crew availability, passenger travel, and tightening quarantine rules in Asia will likewise help keep rates elevated or climbing.

Trucking delays and cost increases

With high demand from consumers, importers are rushing to replenish inventory, causing capacity in trucking to tighten and driving rates up. 

After weeks of disruptions, goods are moving across the Ambassador Bridge linking Detroit and Windsor, Ontario. Demonstrators – including many truckers – had blockaded the bridge to protest Canada’s COVID restrictions causing trucking delays, diversions, and disruptions to auto manufacturing on both sides of the border.

When will freight rates and shipping prices go down?

In the current situation, many importers and exporters are wondering when they can expect freight rates and shipping prices to go down. The answer? Not yet. 

But, despite potential delays and high freight shipping costs, there are a few steps importers can take right now: 

How to navigate the current freight market: 

Compare at least a few quotes and modes to make sure you are getting the best cost and most efficient service possible.

Buffer your freight budget and transit time for changes. Costs due to unforeseen delays or limited capacity can arise, so be prepared.

Explore warehousing options to mitigate the effects of lowered demand and business restrictions in the US.

Pay attention to the profitability of your goods and consider if a pivot could be worthwhile. Additionally, remember to factor in freight costs when assessing profitability.

How small or midsize importers can plan for operational success:

Understand that delays and extra charges may arise. Freight forwarders are trying their best to move goods on schedule without additional fees, but in this unstable period, delays and additional charges can occur out of forwarders’ control.

Consider which shipping mode is best for you right now. As during non-pandemic times, ocean freight is typically far cheaper but has significant lead time. If your transit time demands it, ship by air and you’ll have confidence in the transit times.

Communicate regularly with your freight forwarder. This is more important than ever – staying in touch means you’ll have a better handle on your transit time and stay on top of any changes that may arise.

Make sure that you have manpower to accept your goods at arrival. This will minimize delays.