Freight Rates: Trend Review for 2020 and the Outlook Into 2021
Freight is an essential part of your business. You need to get your products to your customers, but you rely on various shipping methods to get the job done. That makes freight shipping rates a strong influence on your prices. The cost of your products reflects various expenses, and this includes the price to ship them.
As you look back over 2020 and into 2021, you may be wondering why freight rates are so high. The coronavirus pandemic affected global markets unlike any event in recent history. You may be feeling like freight rates are higher than ever, and you want to know why. We at Universal Cargo are here to help you understand why freight rates are at their current level.
Freight Rates in 2020: Year in Review
When COVID-19 became a worldwide pandemic in the first quarter of 2020, great uncertainty struck buyers and shippers around the globe. Due to job losses and a general sense of worry, people started spending less money, causing a decrease in demand for shipping. Companies also worried about the demand for their products and shipped fewer items. This is why freight rates became so low when the pandemic began.
By the end of the first quarter, people began stocking up on household goods. At the same time, they bought fewer services due to social distancing and concern over having enough money for the goods they needed to survive. This created a high demand for products, giving a higher workload to shipping companies. Freight rates increased as a result.
Freight movers had trouble keeping up with the high demand throughout the year. Fewer trucks were available to ship goods to meet this increased demand due to the pandemic, raising the value of each available truck. Although gas prices dropped during the first two quarters of the year, they steadily increased as the year went on, driving freight rates even higher.
By the third quarter, consumers were still spending higher amounts of money than normal on goods thanks to government stimulus packages and fewer service purchases. This caused freight prices to continue to spike as businesses sought to meet the high demand for goods. The trend of higher spending on goods carried into the fourth quarter. Fewer available trucks and an increased freight volume kept rates at record high levels, which continued into the new year.
Now let’s see how the COVID-19 pandemic affected different sectors of the shipping industry.
Ocean and Air Freight Rates
Shipping freight by sea has been a constant part of commerce since ocean-going vessels made it possible to move goods to foreign lands. Businesses rely on ocean freight to move large, heavy loads of products. Freight ships can carry many goods at a time, making ocean freight an efficient way to transport goods to the land of their next destination.
The COVID-19 pandemic and trade regulations between China and the United States were the biggest factors that influenced ocean freight rates in 2020. When the pandemic first started, companies began shipping less freight by sea to match the decrease in product demand. As the year progressed, demand increased, causing higher ocean freight rates. This remained steady into the holiday season as shoppers bought products over time instead of all at once at the end of the year.
The pandemic may have had the strongest effect on air freight rates of all shipping methods. Due to the highly communicable nature of the coronavirus, government mandates and safety concerns caused commercial air travel to plummet. And since most air shipping occurs on passenger jets, shipping prices spiked due to this decrease in travel. By the middle of the year, air freight rates returned to a more normal level. This lasted until the holiday season, when an increase in product demand caused air shipping prices to spike once again.
Universal Cargo will always compete for your business. Whether you need to ship freight by air or your business relies on ocean freight shipments, you can count on us for a competitive rate and the top-notch service you expect. We have the experience to get the job done. Our existing relationships with shipping companies around the world guarantee that you get the help you need when shipping products by air or by sea.
Trucking Freight Rates
The trucking industry also experienced changes in 2020 as a result of the coronavirus pandemic. In the first quarter, freight rates decreased as the demand for shipping goods saw a drastic drop. Then, as consumers began ordering more goods online, freight companies found themselves unable to keep up with the spike in demand. This created a high demand for truckloads and not enough trucks to move them. This caused trucking freight rates to increase, and the high demand continued for the rest of the year.
Universal Cargo has expanded trucking freight services in the continental United States to keep up with this high demand. Our relationships with other trucking companies allow us to make connections all across North America. When you need to ship your goods by truck, you can count on us to make it happen with exceptional results. And as always, we offer competitive prices to earn your patronage. You can enjoy great rates with top-of-the-line service with Universal Cargo.
Outlook for Freight Rates in 2021 During the COVID-19 Pandemic
During the first quarter of 2021, trends from the end of 2020 have remained steady. There’s been a consistent demand for freight shipments as consumers continue to buy goods online and spend less of their money on services. People are traveling less and taking fewer vacations all while doing more shopping online. Even as freight rates maintain their consistency, there’s still a high level of demand keeping freight rates up.
While the coronavirus outbreak continues, you should consider approaching the shipping of your goods with hopeful optimism. The introduction of vaccines has the potential to bring public health back to a normal state, causing businesses to look forward to a gradual return to regular freight rates. If tensions continue to ease, freight rates should avoid any drastic dips or spikes.
As you continue to ship goods in 2021 and beyond, keep a close watch on the latest COVID-19 information and international trade deals to help you make smart shipping decisions. For now, remember that there’s still a level of uncertainty about what could happen with the global market, affecting freight rates. But the difficult situations of 2020 are in the past, and 2021 is showing promise.
Ship Your Goods With Universal Cargo
At Universal Cargo, we care about the companies we do business with. Our goal as a company is to enrich the lives of everyone involved with shipping your freight, from our workers to yours. You can count on our team of experts to make the shipping process easier for you, and you’ll enjoy working with professionals who know your company and meet your unique needs. You’re more than a number in a filing cabinet to us. You’re a valued customer, and your success is our success.