COVID-19, closure of ports, shipping delays, and capacity shortage led to the global shipping crises that most traders worldwide had to suffer from. The situation that started to unfold because of the worldwide pandemic soon became independent of the disease spread and left marks that won’t be reversed.
For instance, the increase in the shipping costs amid the pandemic and shipping crisis might return to normal soon, but it won’t go back to what it was in 2019. Therefore, importers, exporters, and entrepreneurs have to find ways to stay ahead in the given conditions.
This article will help you understand the whole scenario about shipping delays from china and current shipping issues related to costs. We will also share an action plan to cater to the global shipping catastrophe and manage your orders in the future.
An Overview Of Underlying International Shipping Issues 2021
The underlying international shipping issues 2021 or, more popularly, China’s shipping crisis is a situation raising amidst the COVID-19 pandemic. Moreover, other incidents like Suez Canal had a multiplier effect on increasing clouds of concerns in the international shipping scenario. Overall, it shaped itself into a crisis affecting every global entrepreneur and trader.
The main reasons behind the gigantic crisis are as follow:
- Spike in demand for consumer and industrial goods across the world
- Lockdown in Asians Markets, specifically China
- Closure of Ports in China due to COVID-19
- Incident of Suez Canal
Unfolding Global Shipping Issues: Shipping Delays From China
The global shipping crisis is not the only reason why shipping delays from China have become commonplace for traders in the last two years or more. However, it can be highlighted as one reason for many factors leading to unexpected delays. Most of the reasons why shipments face delays in getting delivered are from the supplier side.
The other reasons contributing to the shipping delays from China are as follow:
Delays From Suppliers
Delays from suppliers can be due to many external and internal reasons. Whatever the force, it results in a late departure from the ports and ultimately delayed delivery. Some reasons why supplier makes delays in preparing the shipment are:
- Labor shortage leading to late completion of order
- Cash flow issues at supplier end hindering procurement of raw material, FOH, or labor costs
- Power shortage and power cut issues in far off and internal provinces
- Poor order management from the supplier side due to a large number of orders
Simple. Free. Advice. No Obligations.
Dealing With Intermediaries
Facing undesired situations like late shipment delivery is widespread when dealing with intermediaries. An intermediary can be a trading company or individual trader sourcing products from different manufacturers. In that case, it will lead to slow communication affecting the entire process.
Unprecedented Calamities: Shipping Problems Due To COVID-19
Unprecedented calamities in a city, province, etc., will stop the operations and leads to delayed shipments. One example of such disasters is the horror of COVID-19 that we’re still dealing with; every day, a new variant is coming up. The new South African variant, Omicron, might impact international shipping issues in the near future.
Slow Communication
If the supplier’s sales team and customer representatives are not prompt enough to answer your queries, it will cause delays in order shipping times.
Market Dynamics
Market dynamics and uncontrolled factors also play a significant role in how fast your orders are shipped and delivered. Imagine a spike in raw material cost resulting in a scenario where the supplier has stopped the work waiting for raw material prices to drop.
Another situation might arise when the Government Environmental inspection teams evaluate a supplier’s or manufacturer’s premises, resulting in delayed order fulfillment.
Unexpected Shipping Costs From China
What has caused the shipping costs from China to spike up to 10 folds?
In September 2021, the shipping costs of a container from China to the US had reached an all-time highest, $20,000. The price is ten times higher than before the pandemic, as it was reported to be around $1500.
However, October turned out to be a progressive month for international traders, witnessing a drop in shipping costs by halving. However, the price is still higher than what it used to be. The unprecedented hike was undoubted because of the shortage of capacity, shipping delays, and lockdowns of ports. However, these effects will be canceled out in the near future, but the costs will remain high.
Let’s unveil the reasons leading to unexpectedly higher shipping costs from China.
International Tariffs On Shipping
The recent trade war going on in all regions of the world has led to an overall spike in shipping costs across the borders.
Clearance From Customs
Every shipment load has to be given clearance by the customs before shipping. It requires documents, paperwork, etc. in China as well as the importer’s country. Therefore, the extra cost of arrangements makes the shipping costs higher than expected.
Taxation because of HS Code
HS Code of imported products makes them highly taxed products. It also adds a cost to the shipping and handling expenses.
Careful Handling Of Different-Type Products
If you’re importing any environmentally dangerous product, fragile product, etc., it requires special handling and care. Therefore, extra expenses are incurred by the shipment company to safely deliver it.
Warehouse Costs
Having a remote warehouse location in the destination country or China will result in higher shipping costs.
Misc. Transportation Costs
Palletization due to floor-loaded containers, wrong delivery address, offloading to the third party due to unscheduled delivery, etc., can lead you to pay more than the actual shipping costs of an order.
How To Cater The Global Shipping Catastrophe?
The first question is how you’re supposed to lower your freight costs and avoid shipping delays from China. Here are a few ways to act proactively and manage your business well in the global shipping catastrophe we’re facing right now.
Effective Planning For Restocking
Since the global sea trade faces delays, effective restocking planning will help businesses stay ahead of customer demands. However, it requires accurate estimations of expected demand coming from the customers.
Businesses should place their order earlier to cover any delays that might occur. For instance, a brand in the US should order two to four weeks ahead of the order fulfillment.
Managing Your Purchase Orders and Costs
Since the surge in sea freight prices has spiked, the companies and importers have to plan efficiently. Of course, the fees would reflect the retail prices, but the costs per unit could be reduced by working efficiently.
If a business owner has a purchase order(PO) of less than container load(LCL), but closer to full container load(FCL), it is wise to increase the size of the purchase order and ship FCL. It is because the shipping remains the same per cubic foot regardless of your load. Therefore, why not use the idle space too?
Simple. Free. Advice. No Obligations.
How Can GlobalTQM Help You?
GlobalTQM is a sourcing China company working to help US business people forward their orders smoothly. We can help you get through this global shipping crisis or at least minimize the effects on your business operations.
Order Management
With our order management service, we remain with you from supplier validation to negotiations, purchase order review, preparation, and handling of your purchase orders. You can get control of your international order remotely by purchasing our order management service here:
Sample Concierge
When the shipping costs have become so high, why would you spend thousands and hundreds of dollars to receive samples from China’s suppliers? Global TQM’s Sample Concierge service, we receive samples from multiple suppliers, review each sample, check the accuracy, consolidate the samples and ship them to you as a single shipment. So you can save your time and money on receiving multiple faulty samples in multiple shipments.
You can know more about our Sample Concierge Service here:
GlobalTQM Podcast
You should also check out our following podcasts to get more insightful information on managing your orders from international suppliers and saving costs by working closely with sourcing companies: