Why Ocean Freight Shipping Is Getting More Expensive

Ocean Freight Forwarding

From 2020 and early 2021 all the freight forwarding companies are experiencing slow growth due to a rise in ocean freight shipping costs, And if you contacted any one they always blame it on Covid 19. And in this article let us go bit deep into the cause try to find the reasons that is really effecting the cost of sea freight. As COVID-19 one of the reason that has been affecting the shipping costs, but not in the way that you might think, right yes, people are going ahead and getting sick.

People are not working and it’s causing a strain at every port in the entire world. But this might be going on and these high ocean freight shipping costs can be here to stay for a very long time if we do not fix things. Right? So again, let’s go ahead and dive into the very first article here and it’s going to be something from CNBC that basically reports that an aggressive fight over containers is causing these ocean freight shipping costs to skyrocket by up to 300% right? And if you go ahead and look at the very first bullet points  it says ocean freight shipping costs have skyrocketed as desperate companies wait weeks for containers and pay a premium rates to go ahead and get them. So the first thing we go ahead explain is E Commerce has basically boomed in 2020, basically the number of people shopping online where we were supposed to be in 2025 is now here in 2021 and all the companyes wanted their product to push into the marked.

That’s basically increasing the demand for a lot of our products. The ports are not ready for this influx of inventory we are receiving so that’s one point. The other point is basically we have companies, that’s basically calling this a global transport crisis and estimates that 850 of its 8500 products are being affected by the shipping delay. Few huge company and for them to have 10% of their inventory being affected by this. The biggest thing that’s going on here and we’re going to go ahead and go through it in this article is basically, that states in December of 2020, spot fright shipping rates were up 264% higher from Asia to North Europe routes compared to a year ago.

And basically for the same route from Asia all the way. Let’s go ahead and just highlight here for those rats in Asia to the west Coast of the United States, the ocean freight shipping rates are up 145% year over year. Which is insane, right? And compared to last March, low ocean freight shipping price raised from China to the United States and Europe have had searched 300% And it says here, and everyone said that spot rates have raised up to $6,000 per container compared with the usual price of $1,200. And I’ve experienced this firsthand right? Because the business is growing, as ordering more inventory and will always attributed the actual shipping costs being higher based on because I’m getting more value. And yes, that makes sense. But now as going ahead and getting 40 ft. containers and paying roughly 8000 to $9000 for that container to get from china to the Los Angeles.

Poor people are telling we are paying way too much, but the reason why this is happening is because of these Chinese trade war, and let’s go ahead and look at it here. So what’s happening is we already have a trade surplus in china and it has turned dramatically more severe. And in reality there are three containers going out for every container that is coming in. So let me simplify this just a little bit as best as I can. Basically. We have three containers full containers of Chinese goods and products in china that are getting shipped into the United States. That’s getting bought by American citizens, but we only have one full container of United States products and goods that are getting shifted for the United States and into china for the Chinese citizens to go ahead and purchase.

And this is creating a chain reaction are actual USD. The dollar is getting weaker and we can go ahead and see this by manufacturer going ahead and charging more in china as well for products because of this U. S. Dollar and if this trend continues that means we’re going to be paying more for products. And we have one or two options trying to source these products cheaper or go ahead and start charging more for our products themselves and basically makes everything more expensive for United States citizens to go ahead and purchase goods and products. This is attributed a lot based on the fact that throughout COVID-19 the United States has struggled to go ahead and keep their cases down, right but China has done a great job and their GDP and their economy is basically back to normal, if not better than when the pandemic First started because when any flare up goes in China for COVID-19, they shut everything down.

There might be some lockdowns now in North China, but they basically have it under control. And as opposed to the United States, we have so many shutdowns that’s really struggling for the actual economy to get back to normal. Again, the stock market is not the true economy itself and we’re basically seeing this by the US. dollar going ahead and falling right so this could potentially drag on and have huge implications to not only how much we spent on products themselves but basically how much American citizens go ahead and purchase goods and products and it’s not just us it’s going to be everything, not just basically my shoe cleaner or basically your product that you guys go ahead selling on amazon basically be across the board from iPhone to Ikea furniture from anything. You can go ahead and think that we get from china, we can assume that United States citizens will pay more for this if things do not change right?

So again I like to go ahead. Maybe I’m missing something here, maybe there’s more things to go as far as why ocean freight shipping is costing so dam expensive nowadays. But I would love to hear your feedback. Have you heard anything that I’ve missed in this article itself? I would love to hear in the comments below everything I say in this article is my opinion, but I do think that this has some long term ramifications if we do not have china by more of our actual goods and services. But again, my opinion.

What is NVOCC & Function of NVOCC

NVOCC Freight Forwarding Company

what is NVOCC or what does NVOCC do? A Non-Vessel-Operating Common Carrier in simple terms that, someone who agrees to provide all the services of VOCC but does not own or operate vessels, in short, it stands to represent a non-vessel-operating common carrier. It may sound confusing but after reading this article you will know more about what is Non-Vessel-Operating Common Carrier?

                                          INDEX

  1. Definition of Non-Vessel-Operating Common Carrier
  2. Functions of Non-Vessel-Operating Common Carrier
  3. Characteristics of a Non-Vessel-Operating Common Carrier
  4. Benefits of using a Non-Vessel-Operating Common Carrier
  5. What is the difference between actual carrier and Non-Vessel-Operating Common Carrier?
  6. Can Non-Vessel-Operating Common Carrier be a freight forwarder?
  7. Is Non-Vessel-Operating Common Carrier a shipping line?
  8. Advantages and disadvantages of Non-Vessel-Operating Common Carrier
  9. How does a Non-Vessel-Operating Common Carrier benefit, new exporters
  10. How we can help you?
  11. why choose us?

Definition of Non-Vessel-Operating Common Carrier

The function of a non-vessel operating common carrier (NVOCC), is to serve as an agent or intermediary for ocean freight shipments, by booking space on container ships for its customers. In addition to organizing ship schedules and other logistical aspects of ocean freight shipments, Non-Vessel-Operating Common Carrier also works with customs agents and international freight forwarders, as well as provides advice about pricing, tariffs, and other important considerations. In general terms, a non-vessel operating common carrier (NVOCC) performs all operations associated with ocean shipping except actually loading and unloading cargo at ports. However, some NVOs do operate their own terminal facilities to help control costs and maintain control over their logistics operations.

Functions of Non-Vessel-Operating Common Carrier

The main function of a Non-Vessel-Operating Common Carrier is to establish contacts with both shippers and carriers. Once these are in place, Non-Vessel-Operating Common Carrier will then communicate to ensure that their end of the deal has been met. There are various ways to do so. At sea, tracking systems can be used to make sure that every shipment arrives at its destination on time. The term Non-Vessel Operating Common Carrier actually encompasses a few different kinds of business structures. 

Characteristics of a Non-Vessel-Operating Common Carrier

NVOCC’s main purpose is to provide clients with service as much as they need, as well as what they want. A Non-Vessel-Operating Common Carrier will set up a contract that offers services that can be customized, to fit any client’s needs and wants. The job of a Non-Vessel-Operating Common Carrier is hard because they must rely on other companies to do everything for them. They have little control over their decisions and must take things at face value and work around it.  It represents someone who isn’t responsible for any vessels but has all responsibilities of one, leaving many companies too confused to understand just what one exactly does.

Benefits of using a Non-Vessel-Operating Common Carrier

The main benefit of using an NVOCC is that they do not hold any responsibility for what goes on during transport. This means that they do not have to go onboard their vessels to check what cargoes are being carried or make sure that safety standards are being adhered to. Rather, they only have obligations to their clients. There may be more costs involved when using a Non-Vessel-Operating Common Carrier, but that money will be directed towards things like insurance and providing workers’ compensation for employees. These costs may be offset by savings made elsewhere in areas such as fuel consumption due to economies of scale.

What is the difference between actual carrier and Non-Vessel-Operating Common Carrier?

An actual carrier or operational carrier owns or operates vessels to transport goods for its clients. Whereas, the non-vessel operating common carrier does not own or operate vessels, but it offers related services to other companies who do own and operate ships. Actual carriers are also known as ship operators, shipping lines, shippers, operators, etc. whereas NVOCCs are also known as freight forwarders, freight agents, and logistics service providers/3PLs/Cargo Forwarders..

Can Non-Vessel-Operating Common Carrier be a freight forwarder?

Yes. The only requirement in regards to acting as a freight forwarder is that you provide door-to-door delivery of cargo. It does not matter if you do so by land, air, or sea (though in many cases, a Non-Vessel-Operating Common Carrier will specialize in one or two areas). Because there are no special requirements in regards to what modes of transportation you offer, a Non-Vessel-Operating Common Carrier can act as a freight forwarder. Moreover, it should be noted that only licensed NVOCCs may act as freight forwarders.

Is Non-Vessel-Operating Common Carrier a shipping line?

No, there are no shipping lines in NVOCC. A liner shipping company owns and operates vessels to deliver cargo on its behalf. The term NVOCC is sometimes confused with shipping line, but they do not refer to the same thing. A Non-Vessel-Operating Common Carrier performs all of a liner carrier’s duties (and some tasks that liner carriers don’t), but it doesn’t operate any vessels of its own; it contracts out space on other companies’ ships or charters them for special services.

Advantages and disadvantages of Non-Vessel-Operating Common Carrier

It’s important to note that while NVOCC may provide all of the services offered by VOCC, they’re likely not able to do so at an extremely low cost, which could deter shipping companies from wanting to hire them. However, their ability to do business internationally might help them find shipping customers who prefer dealing with international shippers anyway. Another disadvantage is that they may not own any vessels themselves. That means they’ll have no control over when or how quickly shipments can be delivered, but it also means that they won’t have any overhead costs associated with maintaining a fleet of ships. In many cases, Non-Vessel-Operating Common Carrier offers a different kind of advantage.

How does a Non-Vessel-Operating Common Carrier benefit, new exporters

Non-vessel operating common carriers (NVOCCs) can help reduce shipping costs and time for companies looking to export. A potential exporter must be cautious when choosing a shipping carrier, and consider whether or not it will cost less in time and money to use an NVOCC. Non-vessel operating common carriers can offer lower prices than regular steamship lines by sharing containers, with other companies that would otherwise spend more on storage space. Using a Non-Vessel-Operating Common Carrier also helps streamline shipments by reducing paperwork, making it simpler to send goods abroad without being charged for excessive labor or administration fees.

How we can help you?

One of our representatives can explain how we can help you and your company with all your NVOCC needs. Just click on our contact form and send us a message! Your inquiry will be responded to within 24 hours, Monday through Friday (excluding holidays). To ensure that our email doesn’t get caught in your spam folder, please add inquiry@cslindia.net to your address book or safe list.

why choose us?

We are experienced, specialized, and able to work with all of our clients professionally. We would like to make sure that your shipments reach their destination on time and intact. With us, you don’t need to go through any paperwork or stress yourself out because we can handle it all for you. What is more important than time and money right now? That’s why we are here! You get great quality service at an affordable price. It sounds like a win-win situation, doesn’t it?