Logistics costs will continue to rise next year, and it is not impossible that they will double!

Against the backdrop of supply chain tensions and soaring transportation costs caused by the epidemic , shipping and logistics suppliers are raising their contract prices for next year , and cross-border sellers have to prepare for rising shipping and logistics prices next year.

Industry experts estimate that rates in many annual contracts will double next year compared to prices agreed upon earlier this year , and some trucking companies are expected to see double-digit increases in contract rates in 2022 .

Previously, long-term contract rates in the freight and logistics markets were generally stable , fluctuating based on changes in market demand and the availability of actual capacity , combined with spot market pricing . Shippers often sign multi-year agreements with multiple carriers and revise the contract content every year .

But since the pandemic, prices have been rising across the freight industry, including package delivery, trucking , ocean freight and warehousing .

Year-over-year change in domestic freight spending in the United States

According to relevant data, domestic road and rail freight rates in the United States this year have risen by about 23% compared to 2020. Overall logistics prices hit a record high in November, up 3.4% from October and up 14% year-on-year.

Trucking companies and other logistics companies have seen rising costs as wages rise and labor becomes scarce . Express delivery giants FedEx and UPS both said rates for most services will increase by an average of 5.9% next year, the first time in eight years that the annual rate of increase for either company has exceeded 4.9%.

Prices for shipping containers under annual contracts could reach new records , according to shipping data and procurement specialist Xeneta, which said spot prices to ship a 40-foot container from Shanghai to Los Angeles earlier this month were 75% higher than a year earlier .

Price changes of 40-foot container from Shanghai to Los Angeles

Freight forwarder Seko Logistics also said that the contract rate for shipping a 40-foot container from Asia to the West Coast of the United States may double to $6,500 to $7,000 next year. In 2019, the cost of the same route was only about $1,500.

On the trucking side, average contract rates hit a record $2.51 a mile last month, excluding fuel surcharges, according to online freight marketplace DAT Solutions LLC.

In addition, as labor costs increase, the cost of storing goods in warehouses will also rise . Whether it is Amazon's warehouses or other companies' overseas warehouses, they will all face cost increases, and sellers will inevitably bear part of the pressure.

From this, it can be seen that the increase in shipping and other operating costs next year is inevitable, and cross-border sellers should plan early and find the best solution.

logistics

Cross-border e-commerce market