Although 2020 was perhaps the most unpredictable year in recent history, its effects aren’t over yet. It’s still possible that 2021 will have significant curveballs, especially if the COVID-19 vaccine rollout hits significant obstacles.
Global trade will likely take significant time to recover, depending on what economic stimulus packages governments worldwide continue to implement. Because all the variables affecting freight rates are more in flux than usual, shipping costs will continue to be unpredictable for small consumer shipments and larger import and export shipping alike.
Fuel Fluctuations
Oil costs naturally fluctuate based on supply, demand, and general world events. Because COVID-19 drove oil prices so low in 2020, they may increase to pre-pandemic levels consistently for the remainder of 2021. Instability in oil-producing regions could send oil prices skyrocketing with little notice, but with the relatively peaceful environment in the Middle East so far this year, sudden spikes seem unlikely.
Freight rates are only partially influenced by fuel costs, so in some cases, a drop in fuel prices won’t affect shipping costs. Only certain types of fuel, such as jet fuel or diesel fuel, are affected in some cases.
Less Capacity
Air freight has been sharply impacted by the decrease in passenger flights all over the world. Cargo carriers have not been as strongly affected, but travel and quarantine restrictions have added a new layer of complications to pilot scheduling.
Lockdowns in entire cities or countries have also caused a reduction in flight or ship availability in some routes. Although this varies dramatically for some regions, the overall disruption has had a ripple effect worldwide.
In some cases, a shortage of shipping containers may also increase prices or cause significant delays. This new issue arose in early 2021 and is likely to persist for a while as manufacturing struggles to catch up after COVID-related disruptions.
Demand Increases or Decreases
Since the pandemic is still ongoing, it’s difficult to predict when and how product and shipping demand will increase again. It’s important to remember that even a decrease in freight demand is not always a good thing for importers, as a drop in demand could result in smaller, affordable regional shipping companies reducing their capacity or even going out of business.
Supply chain interruptions that are unrelated to freight and logistics may also cause drops or spikes in demand. In some cases, manufacturers that usually rely on ocean freight switch to air freight to compensate for delays earlier in the supply chain. This, in turn, puts pressure on air freight supply, especially since even courier companies cannot spontaneously move more airplanes where they need to be.
Relying on a Logistics Expert
With all the variables affecting freight this year, you need to leave shipping and freight forwarding to the experts. The shipping industry will constantly be in flux over 2021, so you won’t be able to keep up with all the changes and make the best decisions possible.
Asiana USA has risen to the challenge of the COVID-19 pandemic and found ways to keep our clients’ shipments moving. We partner with a trusted network of shipping companies and customs brokers to get your materials and finished products to you as quickly as possible, even when travel restrictions and port delays get in the way. Call us today at (855) 500-1808 to talk to our team about how we can help secure reliable freight costs even during these unpredictable times.
