The pandemic caused many disruptions for B2B businesses. A fair share of these disruptions have had a direct impact on shipping. With that, logistics prices have seen a ton of fluctuation over the course of the global crisis.
In this article, we will discuss how logistics prices have been affected by the pandemic. We’ll take a look at the top two disruptions to logistics since 2020 and some countries that are overcoming these disruptions. From there, we will discuss how B2B businesses can navigate the fluctuating logistics prices.
Unsurprisingly, the coronavirus has caused a slew of disruptions, and unfortunately, many of these disruptions have affected logistics. Historically high shipping rates are causing inflation around the globe. Many trade routes are experiencing increased logistics prices compared to those both one year ago and before the pandemic.1
For example, the cost of freight between Europe and the east coast of the United States is over 40% higher year-on-year and four times higher than before the start of the pandemic.2
The main disruptions that have caused a rise in logistics prices since the start of the pandemic are halted travel, slowed ocean freight, and increased gas prices. Let’s break these down.
At the beginning of the pandemic, many countries locked down their borders to restrict travel. Since 90% of air cargo travels on passenger planes, this disruption caused an air freight shortage.
The demand for ocean freight has jumped all over the charts since the start of the pandemic At first, the demand was down since retailers were skeptical to stock their shelves, and then the demand quickly went the other way during an extended holiday season.
Both of these disruptions caused logistics prices to skyrocket at different times. Fortunately, these situations have since been resolved.
Although intercontinental travel is beginning to resume, the geopolitical issues between Ukraine and Russia have introduced additional issues for B2B traders from around the world.
In an attempt to minimize the destruction, many countries and organizations have severed connections with Russia. Since Russia is one of the world’s largest oil producers, this separation has caused a spike in fuel prices around the world.3
Fuel prices are directly related to logistics, so when those prices are up, logistics costs are, as well. Because of the timing, the impacts of this crisis are simply an extension of the troubles that many B2B businesses have been facing since the start of the pandemic.
This geopolitical issue has also required many air freight carriers to divert their routes around Russian airspace. This has caused carriers to raise their rates, as well.4
The instability in logistics is still widespread and the effects are felt worldwide. However, Asia has gotten a glimpse at the light at the end of the tunnel.
China, for example, has seen some shipping prices drop recently, specifically when it comes to ocean freight on routes between the west coast of the United States. This comes as a result of the downturn in demand. Containers that had previously cost US $21,000 are currently down to US $16,000 and are continuing to drop further.5
At this time, no other regions have reported such promising signs of recovery.
Although there are many uncontrollable forces that affect logistics prices, there are a few techniques that B2B traders can use to minimize logistics prices. Let’s review these money-saving techniques.6
A clear understanding of your current logistics costs is essential for navigating the fluctuating logistics prices. Conduct a thorough review of your expenses to see what is essential and what is not.
Look for any subscriptions or services that are no longer necessary for your logistics efforts. Even the smallest fees add up, so reducing them can help lower your total shipping costs.
Once you’ve cut costs where applicable, it is time to start thinking about how you can optimize your shipping practices. This can range from implementing best practices when backing shipping containers to choosing a better shipping method.
For example, don’t leave part of a shipping container open. You’re paying for the space, so it only makes sense to use it.
Cutting back on the packaging is another great way to save money on shipping. Even small amounts of packaging add up, saving traders money on packaging materials and weight for shipping cargo.
It’s important to ensure that your cargo is well protected in transit, so it is essential to find the balance between suitable and cost-effective.
Sometimes optimizing logistics requires a bit of outside support. In these instances, outsourcing and automating are two great approaches.
Since the idea is to optimize and enhance in order to save money, don’t pay for services or software that you won’t use. Take advantage of free trials to make sure that the tools meet your needs and make sense for your logistics workflows.
Alibaba.com offers shipping services called Alibaba.com Freight. These services are designed to streamline the experience of B2B trade in the e-commerce marketplace.
This is one of many services and tools that are used by Alibaba.com to enhance the selling experience for B2B wholesalers and manufacturers. Some other tools include Trade Assurance, product promotions, and demand forecasting.
Sign up for Alibaba.com to tap into these powerful selling resources and connect with more buyers in no time.