6 factors affecting international shipping costs
Of course, if you own an international company, more specifically a cross-border e-commerce company, you have to deliver across international borders and you may be wondering why the price can seemingly change by a penny. As you can imagine, there are many variables involved in moving goods and supplies from one country to the next. From economic conditions to fuel prices to explosive international disputes - it can take a while for your parcels to reach their destination. You can better prepare for changing shipping costs by educating yourself about the factors that affect those costs. Learn more about why international transportation costs are constantly changing.
Fuel costs
Regardless of how you send your packages, you will need some type of fuel. The cost of fuel seems to be constantly changing, which means the prices for shipping your goods will change too. The rise in fuel prices is causing transport companies to pass these additional costs on to their customers. All possible events can trigger a change in the price of fuel. If an oil producer has a large supply of oil, it will flood the market and depress the price of fuel. Serious international conflicts can also disrupt a country's oil supply and drive up fuel prices dramatically.
Due to the unpredictability of fuel prices, many transportation companies are investing in energy-efficient technologies to curb their reliance on fossil fuels. This can help mitigate the negative impact of rising fuel prices on international shipping costs, but shipping companies will continue to raise prices for their customers.
Commercial tariffs and duties
Cross-border e-commerce is synonymous with shipping to another country, which also means the potential for trade tariffs or taxes on goods imported from another country. If a consumer or a company orders goods from another country with applicable trade duties, a tax must be paid on this purchase, which increases the international shipping costs. Representatives from one country may decide to impose trade tariffs to encourage domestic production and manufacturing, or to punish another nation for unlawful behavior. If one country imposes trade tariffs on another country, the receiving country will likely impose its own trade tariffs, restricting trade between the two countries.
Trade tariffs are a direct consequence of international relations. Countries can deny human rights violations, the proliferation of nuclear weapons, or questions of sovereignty. To avoid these costly tariffs, companies may be forced to find suppliers in other countries. Some tariffs can remain in place, while others can come into effect temporarily until the two countries can reach an agreement.
security
Some countries may also impose strict security measures in ports of shipment. This is usually common in countries that are ruled authoritarian or in a state of emergency. These countries may view all incoming packages with skepticism and may subject them to a rigorous screening process before they are allowed to enter the country. These additional security measures can delay a shipment or affect the total shipping cost if the port applies a security surcharge. Transport companies should have a good understanding of which ports have these types of fees so they can charge their customers an additional fee.
Port congestion
At the world's busiest ports, supply chain bottlenecks can arise, which can increase fuel costs and delay parcel deliveries. This mainly affects ports in Asia including Singapore and Hong Kong as China and other Asian countries increase their domestic production and exports. Whenever you're trying to deliver to one of the busiest ports in the world, chances are your delivery will cost more and it will take longer than expected. Hopefully, as these countries and ports adapt to the increasing flow of traffic, some of these disruptions and delays can be avoided in the future. Until then, however, transport companies know about the difficulty of entering and leaving these ports and will charge their customers accordingly.
height and weight
As with domestic shipping, the size and weight of your shipping containers also affect the cost of international shipping. However, unlike domestic shipping, your modes of transport are limited if you want to get your packages across the ocean. You only have two options: air and sea freight transport. If you are trying to get your package overseas as soon as possible, you will probably prefer air freight. However, a few extra pounds of cargo weight can cost you a fortune shipping by air.
Transport method
The method of transport you choose will also affect your international shipping rates. When shipping overseas, you have a choice between air and ocean shipping. International shipping costs can vary widely. Airfreight shipping will be more expensive than sea freight shipping, in some cases five times as expensive as sea freight shipping.
Airfreight shipping offers many advantages, making the additional expenses worthwhile. Airfreight shipping is faster and more reliable than sea freight shipping. It can take several hours for your package to arrive in another country, while sea freight can take up to a week or more in some cases. Shipping on the open sea is also unpredictable as the ships can inevitably encounter all sorts of weather-related delays. But there are also the strict size and weight restrictions for air freight shipping. So if you want to send heavy cargo, you may be forced to ship your package via ocean freight.
Conclusion on the subject of shipping costs
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