Why Is The Cost Of Shipping To Guyana Rising?
The recent hike in shipping costs to and from Guyana is linked mainly to increased production costs and manufacturers currently operating at a limited capacity. If you see a significant increase in shipping costs that have doubled or even tripled quickly and in a relatively short time, then there are external factors that fuel that, such as the increased cost of living.
Even with the tax relief in Guyana, the prices of commodities, especially construction materials, have increased. This caused a ripple effect in Guyana and even in other parts of the world. Prices for essential goods like food, including eggs, bread, milk, and cheese, have rapidly increased in just a couple of months. It all boils down to the increase in freight or shipping costs due to the COVID-19 pandemic.
Shipping Rates Doubled and Tripled
The shipping rates tripled compared to the prices two years ago, directly affecting the prices of necessities or food supplies in the market. All of these factors, plus the fact that Guyana has this relatively steep food import bill, added up to the problem with the shipping costs. With the high shipping costs, companies are given no choice but to leverage the extra costs and pass that on to consumers.
These aren’t just short spikes because the price increase from freight to local commodities has been lingering for quite some time or several months now. Freight is said to now have that upper hand or the position of strength at this time. The rates are not showing signs that it’s going to come down or decelerate anytime soon.
Shortage of Materials and Manpower
The bottlenecks are seen in the shortage of staffing and materials and production, increasing the demand for transportation and shipping for both local and international customers.
The increase in demand for certain products and supplies, limited transportation, and overwhelmed ports has increased shipping costs. While large businesses would have no problem securing better shipping rates due to the large volume or size of their orders, startups or small enterprises may not cope with the emerging price increase.
These small players would most often be forced to accept any contract given to them due to a lack of connections and negotiating power. Small businesses would be charged with spot rates depending on the cost of raw materials, fuel, and even the weather condition.
Supply Chain Challenges – Supply vs. Demand
Freight would usually charge a premium now, especially during peak seasons, and it’s not driven by purely seeking profit. The increase in freight rates is due to logistical challenges in supply and demand when demand overturns shipping capacity. Spot container rates have continued to grow mainly because of the law of supply and demand.
The supply chain challenges, especially during this pandemic, have been a steep learning curve for many businesses and even the freight and logistics industry. This is evident in highly congested ports and the shortage of containers, affecting supply and revenue for many companies.
The high shipping costs are taking a toll on many businesses, with the only consolation that everyone seems to be in the same boat. The good news is that compared to the uncertain situation last year in 2020, this year has been all about opportunities. The rising costs of shipping in Guyana also speak volumes of the increasing inventory of many companies because freight and logistics are at their strongest.
With the rate things are going, it makes sense to ship in bulk if you want to get ahead of the competition and get the swift movement of goods despite certain shipping chokepoints or congestions in specific ports.