Over the past year, the cost of shipping goods has increased dramatically for trade routes across the world. In just one year, the cost of shipping a 40ft container’s worth of goods from East Asia to North Europe has increased from around $2000 to close to $14,000.
Likewise, though shipping costs aren’t quite as expensive for businesses in the US, shipping costs similarly skyrocketed from just under $4000 in September 2020, to over double that, nearing $9000 in September 2021, according to Xeneta, an ocean freight benchmarking and analytics
So, why is the price of shipping increasing so dramatically?
Shipping costs have been increasing since the beginning of the pandemic due to a number of factors, including various trading countries opening up and locking down at different times, and disparities between supply and demand.
Many shipping companies scaled back during this period, reducing shipping capacity as physical stores closed, to accommodate the change in demand. However, as lockdowns have been lifted across the world, demand for goods by physical stores has returned to pre-COVID levels, and e-commerce continues to thrive, as heightened online shopping habits born in the pandemic are forecasted to remain.
However, capacity for shipping these goods is still low, with a full recovery only forecasted to occur by 2023. Therefore, competition for the limited space available to ship goods via ocean freight has surged, and with this naturally comes an increase in price.
Congestion and delays are also still occurring in the wake of the pandemic, with major events such as the Suez canal blockage earlier this year – in which one of the busiest trade routes was blocked by a 400m long container ship – and the closing of China’s Yantian container port due to COVID, is continuing to disrupt shipping schedules.
Taking this into account, it’s unlikely that shipping costs will decrease anytime soon, as disruptions due to COVID are likely to continue well into 2022. What’s more, as we move into the fourth quarter of 2021 and demand increases in preparation for Black Friday and the holiday shopping season, shipping costs are sure to increase even further.
How can dropshipping businesses avoid these costs and delays?
According to the Financial Times, it’s thought that the record-high shipping costs will force retailers to move supply chains closer to home and result in a trend of reshoring.
As such, dropshippers who were using services such as AliExpress to run their dropshipping business may have to consider alternatives in order to continue to provide steady prices to their customers, while continuing to turn a profit.
One alternative dropshipppers can use to sidestep these hurdles to their e-commerce success is to use a dropshipping sourcing agency that works in their business’ country of operation.
In the US, for example, Dropship Agent delivers goods in 7-12 days, weeks and even months ahead of popular dropshipping hotspots such as AliExpress.
These services can typically provide more affordable products and shipping costs – and can even halve or quarter delivery time – allowing dropshipping businesses to prepare for the fourth quarter of this year, while ensuring that they provide products to their customers on time, at an affordable price.