Exactly Why Are Freight Costs Rising?

Prices continue to go up meaning rising freight costs

Transport and freight costs have been steadily increasing over the past few years and even more so in the last 12 months, leaving many people wondering why. Various factors have contributed to rising transport and freight costs and explore how a freight forwarder can help keep these down. By the end of this article, you should have a better understanding of why transport and freight costs have increased and what can be done to reduce them.

The main factors

  • Covid – a high demand for transport driven by post-pandemic recovery of economies.
  • Brexit – decreased appetite of EU drivers to come to the UK, additional customs fees, port fees – hassle factor so any EU hauliers that do come want a premium.
  • Drivers Mobility package – implemented to safeguard the working rights of truck drivers in Europe by imposing work, rest and cabotage regimes. Inevitably drivers rates have increased and the rules on rest / monthly breaks will mean fewer drivers available at any one time – hence an increase in rates to cover wages.
  • Fuel increases (a consequence of the War on Ukraine) – energy hikes across the board.
  • Driver shortages – wage pressure from the small pool of professional drivers, lack of desire from the younger generation to begin a driving career.
  • Inflation

The Role of Port Fees in Rising Freight Costs

Port fees are charges that are imposed by port authorities for the use of their facilities and services. The fees cover a variety of costs, including maintenance and operation of the port, as well as security and environmental protection. In recent years since Brexit, port fees have been steadily increasing due to a variety of factors such as increased port traffic, as the UK is using these ports a lot more thus causing an increased demand for services.

We predict we will see a standardisation of port fees across the next few years.

Click here for current port fees.

Government information on port codes

So how does a Freight Forwarder help?

All these factors over the past few years have proven why freight forwarders have a place in the market.

From a practical point of view freight forwarders can reduce costs by providing a range of services that can streamline the process of shipping goods.

These services include helping to negotiate better rates with carriers, consolidating shipments to save on costs, and providing advice on the most efficient way to ship goods. Additionally, freight forwarders can help manage paperwork and customs clearance, which can save time and money

From a knowledge point of view freight forwarders have a deep understanding of the shipping industry, which allows them to provide valuable advice and services to their customers. They have knowledge of the various regulations and laws that govern shipping, even more useful with Brexit and the changes the UK is still getting to grips with.

As well as an understanding of the different carriers and their pricing structures. This market knowledge allows freight forwarders to negotiate better rates with carriers and provide helpful advice on the most efficient way to ship goods. By utilizing a freight forwarder’s market knowledge, businesses can reduce their transport costs while ensuring their goods are shipped safely and on time.

Five helpful ways to boost your export trade

Looking to export more in 2023? Unsure what to do? The UK economy is increasing it’s focus on exporting goods with lots of business to be won, here are some helpful ways to boost your export trade.

1. Make exporting key to your business strategy

If you commit to something it tends to happen, right? By focusing on growing or developing exports as a key element to your overall business strategy, you’re likely to form a strategic team and deliver it. This isn’t a short term fix though, plan for the long game and do your research. Where are your target markets or your target customers? How will you finance your exports? There’s a lot of avenues to consider.

2. Keep it SMART

“I want to increase export sales” is a very broad statement. “I want to increase export sales to Germany by 25% this year” is specific and therefore achievable. It’s important to know your target markets and the needs of would-be clients specifically within those markets. There are numerous elements you’ll want to consider such as forecasted demand, local or international competitors and any potential barriers you’ll have in accessing the market.

Benefits of EasyEU

3. Keep it local

If you’re dipping your toe into the water of international trade, start by looking into Europe. Most European countries share similar cultures to ours, most use the Euro as a common currency and most have similar working hours. Once you’ve become confident in exporting, you’ll be able to leverage a lot of the relationships you’ll develop in the European market to look further afield to fast growing opportunities in South America, north Africa or Asia. One of the benefits to come from Brexit is that you now need to “export” to Europe. That export process by and large looks the same throughout the world.

4. Research, research, research

And research some more. This will take time but it’s time well spent and be thorough. Find out who the local trade associations are and subscribe to their publications. Are there any recurring issues or trends you pick up on? Knowing who your competitors to that market are and their prices, if possible, will be key to knowing if you want to pursue sales there or not. If after the research phase you decide there’s not enough in it for you, don’t be frightened to pull the plug.

5. Make it personal

Thanks in large to the Covid-19 pandemic, we’re all now well used to meeting with partners and colleagues from across the world on Teams or Zoom. These calls are great but there’s nothing like a physical visit to nurture long lasting business relationships. Be prepared to travel! Plan a few days or a week with specific meetings with trade partners, affiliations or with potential clients or perhaps to visit a local trade fair.

Take advantage of cheap flights to close big sales in person. Knowing your new partner cares to that extent will go a long way in developing future repeat orders.

Bonus tip

Your freight forwarder can be your best friend! A well-established company which exports may have 10 trade lanes around the world. A freight forwarder will see hundreds of times that each week and all companies will have slightly different export processes. A good forwarder will have a worldwide partner network and will be happy to discuss new trade lanes and offer hints and tips of how best to move your goods in and out of your target country as efficiently as possible.

The importance of re-opening the European market

The importance of re-opening the European market

Winter is upon us, both in a physical and financial sense. With frost laying heavy on the grass in the mornings, car windows to scrape before the commute to work or school run, this can be a very difficult time of year.

We are in the depths of winter in a financial sense too. An economy in recession, interest and inflation at their highest for decades, a war in Europe playing havoc with commodities and a squeeze on real-term incomes. Not to mention the economic effects of BREXIT. If you allow it, this unprecedented combination could overwhelm you.

But businesspeople are a resilient breed. Just like in a meteorological winter, where we don extra layers, warmer boots, gloves and hats to protect ourselves against the cold, we can do the same for our businesses. Doing things the same will only result in the same or lesser results (or freezing appendages!).

Support for your Export

January is an important time to start planning for the new financial year too. We’re often asked by clients for support to help grow export lanes and more recently for advice on winning back European business which was lost because of BREXIT.

Reasons to be Optimistic

As our closest neighbour and biggest trading partner, Europe is the logical first step for a company to explore export trade into. British goods are well respected for their quality within Europe and the devaluation in Sterling has made them very attractive financially.

Brexit = Customer Inconvenience

BREXIT not only brought about issues for British companies but for their European customers too. Goods which are exported by default, need to be imported – adding additional layers of complexity which often results in frustration, delays and as we’ve seen over the last two years, loss of trade.

Complexity such as

  • Finding a customs agent
  • Paying or accounting for import VAT
  • Understanding and paying duties
  • Unforeseen delays in transport and associated downtime

Make your Exports Attractive Again

There are ways however, of making all these problems for European importers disappear which in turn allows UK exporters to compete on a level playing field with their European competition. Using innovative cross-border solutions could allow UK exporters to re-win the business they lost after BREXIT and use the same tactics to grow new export lanes too.

As sure as springtime will replace winter, Britain will climb out of recession. Re-opening the European market will allow UK exporters to retain and grow the business they had before Brexit.

If we don’t the UK risks losing out to less inconvenient European or Worldwide sources and the overall quality of the products on the market are reduced as a result.

What Next?

Read about our innovative DDP Incoterm solution to deliver goods into the EU – EasyEU or speak to one of our team on 01543 418700