Are you looking for ways to reduce your freight costs? Whether you receive manufactured products or raw materials by land, air, or sea, a shortage of shipping containers could cut into your profits, lead you to seek new suppliers, or force you to pass along costs to consumers. Today, too many shipping containers “are stuck in the West when they are really needed in Asia,” reports CNBC. Because container supply can’t keep up with demand, freight rates from China have risen by 300% since March of last year, when COVID-19 began to disrupt supply chains across Europe and North America.
A year later, the current shortage of shipping containers remains a COVID-related challenge. There are several reasons for this. First, because its economic recovery began when other parts of the world went into lockdown, China increased exports while shipments from other nations fell. This stranded containers where they weren’t refilled. Second, because many orders for new shipping containers were canceled, there aren’t enough new containers to meet today’s higher demand. Third, because of a decline in air freight, some containers remain on the ground and were not returned to Asia.
Freight Costs and Load Sizes
Asian exporters are reclaiming more shipping containers, but too many of the world’s 180 million units remain “in the wrong place,” explains Mark Yeager of Redwood Logistics. As a result, spot freight rates have soared and reached $6,000 per container, a steep rise over their price of $1,200 last year. For North American and European manufacturers who buy rubber and plastic products from overseas, the cost advantage of doing so may seem like it’s evaporated. Reshoring is an option, of course, but commodity products in high volumes can be cost-prohibitive.
Buyers of full container loads (FCLs) and less than container loads (LCLs) both face challenges. LCLs, small freight shipments that do not consume the full capacity of a container, require the consolidation of multiple loads. At a time when shippers aren’t struggling to fill containers, there’s a stronger incentive to handle FCLs and higher prices for LCLs. Plus, manufacturers who buy products from China remain concerned about tariffs, trade wars, and general geopolitical instability. Even if you can buy all of the product that you need in an FCL today, will you be able to get it when you need six months from now?
Reducing Costs and Risks
Elasto Proxy, a fabricator and distributor of industrial rubber and plastic products, can help you to reduce your freight costs and business risks. We manufacture products in Canada, store them at warehouses across North American and Europe, and source molded rubber and plastic parts globally. The experience with us is seamless, and our ability to store your products and ship them in response to your sales forecasts lets you pursue volume discounts while conserving cash. Instead of buying an LCL of molded hoses from China, buy an FCL through Elasto Proxy and have us bill you for parts when they ship.
Elasto Proxy can also source different molded rubber and plastic parts for you. If you’re a heavy equipment manufacturer, we can supply not just your molded rubber hoses, but also your molded rubber grommets. We can then store these products in our warehouses and ship them to you along with the engine bay insulation, door gaskets, and floor mats that we custom fabricate. Instead of paying high freight costs to multiple vendors, you’ll get one-stop shopping. Plus, you won’t have to wonder if the products you need are available, when you can get them, and if the freight costs will bite into your bottom line.
The Elasto Proxy Advantage
Rubber and plastic parts may commodity products, but Elasto Proxy isn’t a commodity company. Instead, we’re the manufacturing partner that can help you solve business challenges. Do you need to reduce freight costs? Talk to our team to learn more about how we can help you.