Impact of Rising Freight Costs and Container Shortages on International Trade

Global trade is facing a new phase of increasing freight costs and container shortages, which already represent significant additional costs for companies operating in the international market.

Several factors influence this price escalation:

• Rebel attacks in the Red Sea, leading to route deviations.
• Drought in the Panama Canal, affecting navigation.
• Reduction in the supply of ships, known as "blank sailing."
• Movements like Mexico’s, which invests in bringing production back to the country—a practice known as nearshoring.

Since the beginning of the year, the sea freight rate for 20-foot containers on the Asia-Europe trade route has more than doubled, jumping from an average of $2,600 to $8,000 in May, a level close to the peak of the pandemic, which was $10,000.

Additionally, the shortage of containers in the market and the average price increase expected for 2024, initially projected at 5% to 10%, has now advanced to 20% to 25% compared to last year. The volatility is intense, and companies are finding it difficult to plan.

International logistics operate in closed cycles. Ships depart from an initial port, visit various destinations, and return to the port of origin, following a predefined schedule.

"However, when there is a disruption in the supply chain, whether due to conflicts, droughts, or other reasons, and a ship cannot dock at one of the scheduled ports, all subsequent stops are affected by delays," explains Marcelo Hernandez, an expert in business management and international logistics.

If this situation occurs with several ships over consecutive months, the problem escalates globally. It takes time and additional costs are required to restore normalcy.

Larger companies with expanded structures that depend on suppliers from China have started investing in larger acquisitions for stocking, while others find themselves in a critical situation, with low inventory and no supply forecasts.

In some cases, emerging countries have announced protectionist measures in advance, and companies in the automotive sector, for example, have anticipated their exports before these trade barriers were implemented. As a result, they have dumped a large volume of goods into a market still lacking demand, overloading container occupancy and space at some ports.

Moreover, the growth of companies looking to start production in Mexico to serve the domestic market and the United States has increased, and there are reports that shipping lines end up prioritizing this route, which takes an average of 20 days.

In an uncertain environment, volatility can be the biggest challenge for companies operating in the international market.

Importance of Specialized Advisory Services

Given a complex and challenging scenario, relying on specialized advisory services in import and export becomes essential. These advisors provide the necessary support for your company to quickly adapt to market changes, minimize risks, and maximize growth opportunities.

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