Shipping Costs Expected to Continue Rise in 2022

Shipping Costs Expected to Continue Rise in 2022

December 20, 2021 from Floor Focus News

New York, NY, December 20, 2021 – Companies are bracing for more steep increases in shipping and logistics prices next year after supply-chain costs soared in the scramble to move goods during the Covid-19 pandemic, reports the Wall Street Journal.

“Transportation and logistics providers are seeking big boosts in prices for contracts for the coming year, signaling that the inflationary pressure driven by strong demand and tight capacity in freight markets is likely to persist.

“With high shipping demand still far outweighing tight capacity across the freight sector, industry experts say transport operators have leverage to raise prices when negotiating new contracts. Ocean-shipping executives say they expect the rates set in many annual contracts will double compared with agreements struck earlier this year, before supply-chain bottlenecks squeezed capacity. Some trucking companies project double-digit growth in contract rates for 2022.

“Prices have been rising across the freight sector, including in parcel delivery, trucking, ocean shipping and warehousing. Most freight-transportation contracts are negotiated annually, although many large shippers may have multiyear agreements with a variety of carriers.

“‘I think folks are a little shell-shocked at the moment,’ said Todd Bulmash, a logistics executive and board member at the Council of Supply Chain Management Professionals. ‘They’re preparing for the worst.’

“Pricing in most freight transport and logistics markets generally slides between largely stable long-term contract rates and spot-market pricing that is more sensitive to shifts in demand and the availability of capacity. Prices in spot markets for ocean shipping, trucking and other logistics services have escalated sharply this year.”