- Factors Influencing Global Shipping Costs
- Geopolitical Strains
- Isolationist Trade Policies
- Oil Prices
- Global Trade Is Changing, And So Is Shipping
- Longer Trade Routes
- So, Will Shipping Prices Rise Or Fall In 2024?
- Domestic Shipping Outlook For 2024
- Reassurance With A Free Shipping Quote
Shipping costs have gone up a lot in recent years. For about a decade before 2018, shipping costs remained stable. This greatly boosted global trade as businesses could easily make a pretty accurate prediction of what they would need to spend on shipping in a given period.
However, since 2018, the international shipping landscape has become much less predictable and more costly to navigate.
For instance, in 2018, the cost of shipping a 40ft or equivalent container from Shanghai to the West Coast of the US was between $1,200 to $2,000.
By the end of 2022, the same trip with the same container would have cost just under $8,000. This increase in doing international business has placed a strain on the economy and is, without a doubt, a contributing factor to the grim inflation experienced by consumers in 2022 and 2023.
However, since the COVID-19 pandemic was a driving force behind the increase in shipping prices, and most countries are recovering from the pandemic, should you expect shipping prices to dip in 2024? Continue reading for a detailed look at the forecasted shipping prices for 2024.
Factors Influencing Global Shipping Costs
Economies are interwoven and intertwined across sectors within a country and across countries.
As such, predicting shipping prices in advance will never be 100% accurate as so many variables can contribute to costs.
However, several key factors can give us some insights to make an educated guess at what's in store for 2024:
Geopolitical strains can have a major knock-on effect on global trade. Most notably, the sanctions put on Russia in 2022, after the invasion of Ukraine, had caused substantial disruptions to supply lines, which drove up shipping costs during the year.
Ships must travel greater distances or through smaller ports to avoid violating sanctions, causing delays, using more resources, and adding to port congestion, all of which increase the cost of shipping goods.
Isolationist Trade Policies
Isolationism is when countries attempt to promote goods and businesses within a country over one's from foreign countries. This is done by increasing taxes and introducing tariffs on goods from certain countries to make them less favorable.
In recent years, there has been a stark increase in isolationism in both the US and China. This has led to higher taxes and restrictions on certain types of goods, leading to increased shipping costs.
Oil prices reached an all-time high in 2022. It's no coincidence that shipping costs also hit near-record highs in the same year. Ships are massive vehicles that need enormous amounts of energy, mostly oil, to operate.
When oil prices climb, it makes running the ships incredibly expensive, greatly increasing the cost of shipping goods.
Global trade is changing, and so is shipping
The global trade landscape has morphed substantially in recent years. We are now witnessing a reduction in the growth rates of international trade, primarily due to geopolitical concerns and the exacerbation of protectionist policies.
Many countries have sought to build their own independent, self-sustaining trading systems, which can easily be unreliable and unpredictable regarding international commerce. This lack of coordination and reliability is mirrored by an overall stagnation in economic and industrial activity throughout Europe and even parts of the United States; unlike previous booms in global economic activity, this period has seen reduced inventories as well as dips in consumer spending coupled with a decrease in wage growth.
The ramifications for the shipping sector have been tangible, given these effects on global trade. In particular, tonnage levels are likely to remain under pressure for the foreseeable future – not helped by the low economic growth expected for much of 2023 due to these aforementioned factors.
Fortunately, however, analysts anticipate that spending should start to normalize from late 2023 onwards after a period of economic reconsolidation - potentially paving the way for a stronger second-half performance that year before returning to usual growth trends further down the line.
Longer Trade Routes
The reshaping of shipping routes following Russian sanctions has resulted in significantly longer mileages for shipments; Russian oil, gas, coal, iron ore, and metals still find their way to markets but with different buyers despite restrictions imposed.
This shift in trading habits was implemented in batches, which will come into effect fully by 2023 when seaborne ton-mileages are expected to grow by more than 3% compared to the 1% growth predicted in global trade numbers.
This extended mileage will remain unchanged in 2024 as there are no signs of policy reversal. Such a development stands as a surprise indicator that suggests an encouraging scenario for the prospects of maritime trading activities across the globe.
So, Will Shipping Prices Rise or Fall in 2024?
Shipping prices have already taken a downturn in 2023. They are significantly lower in mid-2023 than they were during 2021 or 2022.
Shipping prices are expected to continue falling from current levels into 2024, with some experts predicting a decrease in shipping costs of about 12% throughout the year.
While this figure may not come true, the international shipping industry has a brighter outlook for customers in the coming years.
However, there are expected to be strains placed on freight forwarders and shipping companies in the coming years due to increases in regulations regarding the environmental impacts of shipping.
Domestic Shipping Outlook for 2024
Domestic shipping costs tend to fluctuate less drastically than their international counterparts; however, inflation has caused domestic shipping prices to increase by 2-5%, depending on which company was hired to ship your goods.
Domestic shipping is not expected to face any substantial issues in 2024 and has a more reliable outlook than international shipping for the year.
Reassurance with a Free Shipping Quote
Though 2024 may look promising for shipping costs, you cannot be certain they will remain favorable. That is why it is wise to enlist the services of an established shipping company with transparent prices that guarantees you know exactly what you're paying for.
A1 Auto Transport takes great pride in offering customers a top-tier experience during difficult economic times, which is why we provide free estimates on our shipping services, so they know exactly how much their payment will be upfront.
Get a free quote now.