The negotiations of international freight at this time through which we go is being very unusual. Therefore, foreign trade professionals need to overcome various obstacles on the processes used and define strategies so that they have a north and a more accurate trading technique.
These are difficult times because of the long health crisis and all its side effects, aggravated by the instability of the war without the end of the year. As a result, the global market is directly affected and suffers from the volatility that comes from it.
Continue reading the article to learn about it!
Why is the current international freight market unstable?
The constant fluctuations that occur between the supply of ships and the demand for cargo to be moved is what determines the final cost of international freight.
Given this, we can see that the cost of international transportation is the most obvious item that foreign trade companies need to plan in their operations. Although the manager cannot make any direct interference in the price, he will understand its variables. And, aware of these, you can get the best out of the instabilities and reduce your logistical operational cost.
When it comes to instability of international freight, the foreign trade manager needs to take into account economic, political and social factors. This will allow a better understanding of the dynamics that generates route changes with a larger number of shipowners.
They are:
- exchange rate variation;
- oscillation of the economy;
- political divergence;
- natural disasters, wars and crime.
How has the international freight market behaved?
According to cni (National Confederation of Industry), the “relief” passed on to the cost of international freight on the Asia-Brazil route in the first half of 2021 passed very quickly. Fact is that the average in the freight price of recent times started costing more than six times than before the pandemic.
Experts argue that the persistence in the bottlenecks of shipments and disembarkations in international logistics is signaling the “new normal” of operating transport costs.
In this new scenario, the main effect will be the increase in industrial inums, leveraging inflation. In view of this, the challenges of Foreign Trade in 2022 are in vogue within the federations and trade unions of the Trade System.
The latest lockdown in China and the Russian invasion of Ukraine lead Brazil to import or export inflation. These are important factors that have recorded high peaks in international trade to the highest level since 2003.
Because China is Brazil’s main trading partner, the new restrictive measures were blocking container movement, thus hindering the flow of ships and upsing the price of international freight.
What has interfered with the value of international freight?
The fluctuations in freight prices in the short term affect the management of international transport, because with each threat the debate intensifies. It is clear that the external and unanticipated events hinder the efficient management of the costs of the flow of international production.
Some of these external factors are, for example:
- Covid-19;
- truckers’ strike;
- fuel crisis;
- regulatory or legislative changes;
- queues at ports.
China is considered the “factory of the world” and closed its companies once again, with the suspension of much of the production. As a result, in the face of the law of supply and demand, the values of international freight increased considerably. In addition, the lack of containers leaves the most worrying situation in the freight dispute between Europe, the United States and Brazil.
Should I rely on forecasts for the international freight market?
We should always be attentive when it comes to cost of international freight. After all, no one has a crystal ball to predict the future of transport in Foreign Trade in the face of all the volatility that permeates it.
It was expected to reduce the freight value this year, but nothing happened and many companies found themselves in the “substitution effect”. That is, they migrated from the air to the sea modal due to the 200% increase in freight cost.
Although still in sea freight is no different. Traffic from Asia to the West has increased by several thousand dollars.
This makes international logistics gain prominence, especially for two issues that insist on tormenting foreign trade companies: Covid-19 and lockdown.
After 60 days of stopped, ports and cargo awaiting shipment in Shanghai began the evacuation with the official closure of the lockdown last month.
This situation caused the shipowners’ rush to intensify in the face of the greater chances of heavy cargo rollovers and ships working at their maximum limits.
Other aggravating factors are delays in operations and non-compliance with routes in ports, as well as inflation that faces tariff revisions with exponential increases.
One golden tip that foreign trade experts advise is that companies keep their operations in a very planned way. That’s because shipowners tend to prioritize higher freight and claim that high values will not be passengers.
What is expected for the next few years?
The drastic increase in international freight on our main China-Brazil route has had a strong impact on international logistics. There are several challenges faced, such as lack of space and container, and operational problems with sick crews.
Shipowners also had difficulties in passing on this increase, as fuel and equipment costs did not help. The lack of accessories for performing routine operations also influenced a lot.
The sequence in the rise of fuels did also have also impacted the negotiations. Now the winter and beginning of the harvests promote the increase in the volume of international routes, opening new windows for the movement of cargo.
Therefore, the solution is in state-of-the-art technology used in international operations to contribute to managers in reducing costs. This is because it provides greater agility and practicality when quoting the value of freight with suppliers and guarantees the business under the established conditions.
Count on Cheap2Ship to quote your international freight
With Cheap2Ship your international freight negotiations will be in one place! You’ll forget the tireless email exchange as you can view all your freight suppliers in one place. With more agility in your processes, you can choose the most viable option for your demand at the moment.
All your freight quotes will be organized in the same environment and this facility will provide your company with cost reduction and greater operational control. Thus, it is possible to compare and choose the best international freight for your business through Cheap2Ship which specializes in freight negotiation.
