After months of rising in the ocean freight rate market, prices are starting to reflect the astronomical costs associated with the surges. With costs 547% higher than the seasonal average for the last five years and the caveat that we are not yet even in peak season, concerned suppliers expect 80% of all retail products to spike in price as the season unfolds. While it isn’t just the ocean rates driving up prices, the extremes are definitely the focus among issues happening to impact retail sales as we move into peak season.
Congestion, disruption, containerships on fire, container stack collapses due to weather, record imports, fleets shut down or grounded due to weather issues, and the explosion of e-commerce during a time almost all cargo space was reserved for PPE has left us in an overwhelming logistics market. Nobody, no experts, no CEOs, no laypeople, nobody knows where this roller coaster of pricing and frankly, craziness, is going to stop or land and what the new normal will be for logistics plans for retail after the crush of 2021 ends. Many will claim to have insight, but it’s best-guess scenarios if not wild speculation.
We at Edward J. Zarach & Associates have decades of experience and we freely admit the end is wide open for more disruption, a killer app style revamp of modern shipping and logistics, or more likely, enhanced regulations from investigations into the pricing methods of carriers. Our industry is going to collapse under pressure if the current issues persist.
What we’re seeing with rising prices on retail goods has the potential to reset prices to meet the new costs associated with shipping by ocean freight; the idea that the prices will come down once shipping costs reduce is dependent on the retailers to do the right thing after carriers do the right thing and we see prices come down – unlikely at best. There’s no more difficult fight for consumers than to see prices go down after they’ve risen so much, especially if those consumers eagerly paid higher prices early on in the sales period.
The most important tool in the current situation is preparation and flexibility as you work with your Zarach representative to find a solution to suit your cargo needs. We have options and ideas to work with every shipper and ensure we choose the right trucking, rail, air, and ocean freight rate options for your timetable. We’re going to develop new strategies to ensure we help you rein in prices and schedules to keep you ahead of the curve!