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Shipping cost increases

Evilasio Emanuel Antonio Armando • 13 February 2023

The transportation industry is at the core of most businesses. Whether you
are selling/buying products, components, raw materials or maybe just relocating,
one of the most important aspects is to arrange the transportation process.
Never easier some would say, especially now considering the very wide range of
shipping services available on the market. Indeed, it can be a straightforward
process, however there are a few factors to consider such as the reliability of
the freight forwarder/carrier you decide to work with.

Recently, one of the biggest concerns when it comes to the transportation
industry, is the increase in prices. Nevertheless, we think that an elaborate
overview of the actual context will help our customers to get a better
understanding of the current shipping cliate, and how it may develop.



Increase in Shipping costs overview

There are many aspects to debate when we are talking about the growing prices
in the transportation industry, however, we would like to focus on the most
important ones.

1. Brexit: The exit of Great Britain from the European single market.
This massive change affected many sectors, however one of the most impacted was
the transportation industry. The first few months after the 1st of January 2021
were marked by uncertainty and chaos. 

After many years of free trade, the UK left the European Union and that
brought about various changes when sending goods from/to the EU, such as customs
documents implementation, and of course customs clearance charges. Needless to
say, these customs clearance charges have contributed to the rising costs. Due
to Customs requirements and checks, the freight is now spending more time in
transit, and this is also increasing the costs. At the same time, situations
like mislabeling or the lack of necessary legal documents, or missing and/or
incorrect information provided on commercial invoices can lead to increased
costs for carriers, which in time will be passed over to the end customer. 

2. COVID-19 Pandemic: Since 2020, when the COVID-19 pandemic started,
the world has been constantly struggling with ongoing outbreaks. The situation
has dramatically affected different industries, one of them being the transport
industry. National lockdowns and international restrictions have contributed to
the rising shipping costs, not only for European imports and exports but have
also affected the trade with other continents. 

Contrary to expectations, the demand for container shipping has increased,
following the initial lockdowns and it lead to a shortage of containers. This is
likely the first aspect that has contributed to the increased costs for
container transport. At the same time, many other factors have contributed to
the rising prices, such as the extra measures that have been taken for the
safety of people operating within the sector, one of the few sectors which
continued to operate throughout the crisis. 

3. Drivers' shortage: Again, we are talking about a situation that has
affected not only the UK but many countries across the world. The drivers'
shortage is considered to be the effect of both the COVID-19 pandemic and
Brexit and although it is affecting many countries worldwide, the situation is
particularly difficult in the UK. It is very well known that the UK relied
heavily on foreign workforce from Eastern Europe, especially for driver jobs.
However since the pandemic started, followed by the national lockdown, many
drivers decided to return to their home countries. 

After a few months, new Brexit regulations came into effect, and some of the
drivers couldn't return due to the new bureaucratic requests. The haulage
companies have urged the Government to include the driver position on the
special visa list, stressing out the impact of the shortages. However, the
Government decided that the industry should instead focus on the British
workforce. The recruiting process didn't help very much, as the testing process
has been continuously postponed due to the lockdown restrictions. In the
meantime, the demand has risen and caused tremendous backlogs, and the prices
have increased. 

4. Fuel crisis: Europe is facing one of the most challenging times in
the past few decades and the consequences have already started to appear. Since
Russia invaded Ukraine in February 2022, the global oil market prices have
substantially increased and may continue to do so, according to experts. This
represents another reason for increases in shipping costs, and it's massively
impacting the world's economy. 



How are the increasing shipping costs affecting us?

The events of the past couple of years have dramatically changed not only the
transport industry but also the world. In this context, shipping costs have
surged, and so did the prices of many products globally.

Until this very moment, we at Pallet2Ship have done our best to keep our
prices at the same level, despite the fact that all of our suppliers have
increased their rates. The sequence of events that we have all witnessed in the
last few years have led to unprecedented cost rises, and unfortunately, the
future looks uncertain. 

The current situation is not only affecting the businesses operating in the
transportation industry, but also our customers. Increased shipping costs have
played a part in inflation rising to 6.2% in February, from 5.5% in January.



The UK has signed an agreement with Canada to boost green tech supply chains

by Evilasio Emanuel Antonio Armando • 13 March 2023
The UK and Canada have agreed on a landmark agreement to work together on vital minerals such as cobalt and lithium that are vital to the economy. Launched on the 6th of March by Commerce and Trade Secretary, Nusrat Ghani, and Canadian Natural Resources Minister, Jonathan Wilkinson, the partnership aims to improve the UK's economy by funding research and development between UK and Canadian companies. It helps make tech manufacturers more resilient to global shocks while aiding innovation and growth. This announcement comes during the five-day visit to Canada, where Minister Ghani met with his Canadian government counterparts to discuss the important minerals and attend the International Mines Ministers Summit and the closure of the Toronto Stock Exchange. Nusrat Ghani MP, the Minister for Business and Trade, declared: “Every single one of us depends on critical minerals to make the technology we use in our everyday lives. With a dash for minerals to meet national business needs, it is essential we work to build more resilient supply chains for critical minerals. Through this Dialogue, we will work with one of our closest global allies in Canada to build and strengthen our supply chains and boost innovation, securing jobs and growing the UK economy in the process.” The Canadian Minister of Natural Resources, said: “Canada and the United Kingdom share similar goals and values. By collaborating on the development of the critical mineral supply chains that we need to achieve our net-zero future, we can reinforce global energy security, advance the fight against climate change and ensure significant economic opportunity and support good jobs on both sides of the Atlantic. Today’s announcement is a step forward toward a sustainable and secure clean energy ecosystem.” Canada is the UK’s 13th largest export partner, with UK companies exporting £14.1 billion worth of goods and services to Canada in the 12 months to September 2022. Canada currently produces 60 minerals and metals from 200 mines and 6,500 quarries, making it a huge opportunity for UK mining and engineering companies. The Critical Minerals Statement of Intent and Dialogue will be launched by Minister Ghani at the 2023 Prospectors and Developers Association of Canada Convention. They also commit Canada and the UK to high environmental, social, and governance standards in critical minerals supply chains. As the demand for certain critical minerals is expected to increase by up to 500% by 2040, this statement and dialogue are part of the UK's Critical Minerals Strategy to strengthen supply chains for these minerals. A refreshed approach for delivering the Strategy is due to be published later this year. 

Potential delays at the UK's border, later this year

by duda_designers • 16 January 2023
Air cargo shippers and air transport workers require more transparency for the sake of security. Of course, this will also enhance efficiency.

Change and Reasons for Shipping Line Mergers

by Evilasio Emanuel Antonio Armando • 15 September 2022
JAPANS TOP 3 LINES TO MERGE The announcement late last week that 3 of Japans leading shipping lines, NYK, MOL and ‘K’ Line, are to merge to form the worlds 6th largest carrier came as no real surprise as the move had been rumoured for several months while discussions were being carried out. It’s worth noting that this follows a trend for mergers that has been in play in the shipping line industry for quite some time now, and this merger will further reduce the total number of global carriers to 13. (There were 20 just 6 years ago). Other recent mergers have included APL being taken over by CMA-CGM and APL merging with UASC. REASONS FOR MERGING The main reason for shipping lines to seek mergers up to about ten years ago was to maximise growth potential as manufacturers in the West rushed to switch their production to the Far East. Fleets of new super container carriers were also ordered to handle the increase in demand Now it’s more a matter of survival as the lines have had to fight for a share of a shrinking market against the back drop of the new super container carriers coming on line. The resulting over capacity has made it impossible for the lines to maintain freight rates that would keep them in profit. WHY THIS MATTERS Ten years ago shipping line mergers may not have been a major concern for UK importers as this allowed the lines to invest and meet the demand for more capacity, thereby reducing the issues faced of containers being delayed or short shipped. During a time of growth in the global economy we needed the shipping lines to restructure to meet the demands of importers and exporters. However the mergers taking place now will mainly serve to give the lines more control over supply in the market. This will undoubtedly force freight rates up… and this at a time when UK importers are already struggling with issues relating to Brexit, the resulting devalued pound and an economy that remains flat to say the least. If you have an opinion on this you would like to share please feel to add your comment in the box below.
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