Here are three prominent reasons why shipping costs have skyrocketed, contributing to the shortages and higher prices in car audio and other goods.
The first reason is a question of time. The delays at the port require that a container stay at sea longer. So it makes fewer trips per year. As a result, shipping companies are charging more for each of those longer trips. As Epsilon’s Ronnie Brashear explained, “Where a ship was making 15 trips a year, now it can only make 7 because it has to sit at the port. It has to have triple the food on board, it has to pay the workers for sitting on the ship longer. In Long Beach you sit in the water for two weeks before you are even allowed to come in. So you are paying for lost time.” The pre-pandemic wait time at port was only three days.
Once again, container prices are now approaching $25K, up from $20K a month ago and up from $3-$5K before the pandemic.
The second reason for shipping delays and higher shipping costs, according to blue salve partners, is there has been a consolidation among shipping companies over the past 15 years so what remains is essentially a 5 company cartel. “There was consolidation and they are being investigated for price fixing,” said blue salve co-partner Robert Heiblim.
In other words, shipping companies may be charging top dollar because they know they can.
A third reason for the higher container costs, according to blue salve, is the pandemic itself. Protective gear is being shipped all over the world, say to Africa, where a container may sit for many months waiting for a return load. Chinese manufacturers are now making new containers but the price of steel is up 40 or 50 percent, noted Heiblim.
While these are key reasons for higher shipping costs, there are others including hoarding containers on the part of some larger companies.
Will anyone in this industry live long enough to see the made in USA with USA manufactured parts on the products we sell? Nah…
Longshoreman strikes….. Overcrowded ports…. Tariff’s …. now Freight Gouging…. until we figure out how to get it MADE IN USA for a fair price….. we are going to keep getting what we’ve always got.
This is another very big reason why shipping costs are up as well as the extra time at the port. Every industry is begging for more products! The demand to get more products here in a timely manner is at an all time high. Black Friday products and Christmas products are also starting to ship.
It is called supply and demand. Demand for containers is at an ALL TIME HIGH. When that happens the price goes up. If you can get a container, that is the first step. Now you need to find space on a vessel. Until the demand subsides the price will stay high.
In addition, after a ship unloads in Long Beach, it is taking one whole month to get into Oakland port to unload. Many vessels elected to skip port of Oakland and that opened opportunities for other shipping companies to make straight trips to Oakland at $15,000 per container.