Recent market developments in freight rates and how you can deal with them
In terms of price development, there is a lot going on right now at almost all levels in the scaffolding and construction industry. Last week we told you about the current situation for aluminium and steel. The prices of these important materials are not only regulated by production costs, supply and demand, but also by how they themselves or their preliminary products get to their destination. That's why we want to give you an overview of the current developments in logistics and transport. On top of that, you'll get a few tips on how you can master the current situation as well as possible.
Freight rates rise further
Rising prices for materials such as aluminium and steel are not only related to a material shortage, but also to the global supply chain problems that arose with the Covid-19 crisis. In particular, prices for container transports via ship have skyrocketed in the past year. This applies especially to containers shipped from Asia to Europe or North America. Due in part to pandemic-related closures of Chinese ports, such as Yantian port in Shenzhen in southern China, disruptions in global supply chains have developed to this day.
While a transport with a 40ft freighter was already 500 USD more expensive than in the previous year at just under 2000 USD, the prices rose to no less than 16000 USD in September last year.
According to the Drewry World Container Index, the price for a shipment from Shanghai to one of the European ports is between 11000 and around 12000 USD. Freight rates from Shanghai to Los Angeles are slightly lower at around USD 9,000 per 40ft container (as of 11th April). The composite index is thus 67 percent higher than a year ago. And this is also reflected in commodity prices. Because China in particular is one of the largest metal producers.
Companies can prepare for such supply bottlenecks particularly well by purchasing their products from different sources. Fortunately, Scafom-rux also decided years ago to place our production facilities strategically. We have production facilities in China as well as in Belgium, Romania and Poland. This way, we can cope with transport difficulties and continue to reliably provide you with the scaffolding material you need.
What about transport by air and road?
Due to the problems with sea transport, many suppliers are now increasingly trying to switch to road and air transport. However, the war in Ukraine and the associated sanctions against Russia are also having a noticeable impact on options and prices here. The price of fuel in particular reached its highest level since 2008 in March 2022. In addition, freight transport by air, especially between Asia and Europe, is becoming even more difficult due to the closure of Russian airspace.
In addition to higher fuel prices, the ongoing shortage of truck drivers in Europe and America is also causing problems on the overland routes. In Europe in particular, truck drivers mostly come from Eastern European countries such as Poland, Romania and Ukraine. The shortage in this important occupational group is now being exacerbated by the return of many Ukrainian drivers to their home country and the temporary difficulties drivers from other countries have in leaving Ukraine again.
What can you do now to deal with rising costs?
Sure, nobody likes rising costs - but there are ways you can cushion them. For scaffolding, you can follow these tips:
- Scaffold rental is a worthwhile alternative to buying, as you can use existing scaffolding material that is already close to you. This way, you can minimise costs caused by transport. Our team will be happy to advise you on our scaffold rental options.
- Good planning is always important, of course. But right now, it should be as well thought out and forward thinking as possible, even for smaller projects.
- Right now, good communication with your equipment and scaffolding suppliers is key. Share your plans and strategies with your supplier early to coordinate processes effectively.
Do you have any tips for colleagues on how to deal with rising prices? Feel free to write them in the comments.